Kevin Rudd wants to find 800 more senior public servants to sack. Can we afford to lose them?
As part of his package of cuts to offset a cost to the budget of moving from a fixed to a floating carbon price, the savings were not essential. But they set a good precedent that policy announcements in the lead-up to the election will be paid for, meaning long-term promises will be more sustainable.
Changes to motor vehicle fringe benefits tax are defensible on their merits; savings in some environmental programs, even though abhorred by the Greens, consist mainly of returning funds nominally allocated but not yet spent. The public service cuts are more doubtful.
The public service has undeniably grown more at the senior than the junior levels in recent decades. The Beale report commented on the massive growth in senior executives.
But it’s not just empire building and feather bedding. Much of the impetus has come from ministers themselves demanding more attention from senior executives. It is no coincidence that the growth in senior levels of the public service has run in parallel with a growth in ministers’ personal staff. One of the main reasons for extra work by senior public servants is demands from staffers.
Another cause has been the growth in internal regulation in the public service and the climate of extreme risk aversion that requires more and more activity to be filtered through numerous layers of senior bureaucrats.
Finance Minister Penny Wong, if the government is re-elected, will be key to making the proposed savings achievable. Her department has been one of the major drivers of internal regulation in the public service. If Finance allowed government departments to conduct their activities with far less checking and compliance, there would be less for senior public servants to do.
It is probably hypothetical — these are cuts that can be announced easily and pencilled into the forward estimates, but in reality they will be overtaken by the next budget.
There are limits to the usefulness of efficiency dividends — they eat away at capability. Over its history the efficiency dividend on overall departmental budgets has not so much been a savings mechanism as a reallocation mechanism — it has been taken from all departments, but high priority programs have always recouped its costs.
Get Crikey FREE to your inbox every weekday morning with the Crikey Worm.
More fundamentally, this cut reverses the public service management paradigm of the last 25 years, which has served Australia well. Following former minister John Dawkins’ white papers Reforming the Australian Public Service and Budget Reform in 1983 and 1984, the Hawke Labor government introduced what was then known as the running costs system. Departments were given one-line budgets to manage in any way they thought best to meet governments objectives. Staffing controls were abolished. It proved much more effective; agencies were able to find better ways to deliver services, and there was no blowout in public service numbers. In fact, the reverse happened. During the later years of the Hawke, then Keating, then early Howard governments, public service staffing declined.
The advantage of this for ministers was that they didn’t have to second-guess management decisions. It didn’t matter what staff at what level were employed by agencies; what was important was how they performed.
Admittedly this philosophy broke down as public service budgets blew out in the last two terms of the Howard government when, buoyed by mining revenues, the government abandoned attempts to control public service excess.
Although then-opposition leader Rudd promised to take a meat axe to the public service, the global financial crisis derailed that plan. So there might be scope for public service cuts. The recent cuts, however, appear more arbitrary and come close to micro-management. A better targetted saving would address the underlying causes of that staff growth.
*Stephen Bartos is the executive director of economic policy agency ACIL Tasman