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May 12, 2015

Mathias Cormann's incredible shrinking public service

How do you reduce spending but not anger the electorate? Fire some public servants. The Mandarin's Stephen Eastman reports.

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Tonight’s federal budget includes plans to abolish 32 government bodies, sell four public service buildings and extract millions of dollars in savings from major departments through functional and efficiency reviews. All the details, portfolio by portfolio.

Finance Minister Mathias Cormann says $106 million has been clawed back from the Department of Health’s “contractor, corporate, staff and property costs”, with $10 million of that going to improve the department’s “analytical capacity”. Another $7.6 million has been extracted from the Department of Education, with another $123.4 million to come from axing and redesigning programs.

The Attorney-General’s Department has already begun squeezing $54.2 million over five years out of “administration efficiencies”, Cormann adds, and he says visa simplification and “targeted departmental efficiencies” in Immigration and Border Protection will save $168.1 million from 2015-16.

Eight departments will be subject to “further functional reviews” in the next few weeks: Agriculture; Environment; Foreign Affairs and Trade; the Treasury; Attorney-General’s Department; the Tax Office; Social Services; and the Australian Bureau of Statistics.

The Mint will not be sold off “because it is operating as an effective business and it is well-regarded by its international peers”, and a decision on whether Australian Hearing should be privatised won’t be made until more consultation has been conducted with hearing impaired people and other stakeholders.

A new scoping study has been announced to look at the possible sale of Australian Rail Track Corporation in next year’s budget, and Cormann announced the outcome of earlier studies looking at the potential sale of other assets.

Defence Housing Australia is not for sale:

“However, the government will review Defence Housing Australia’s accounting, information technology and business reporting systems to improve the transparency of the cost of providing services. There will be no change to the entitlements of Australian Defence Force members.”

But for the Australian Securities and Investments Commission’s registry services business, on the other hand:

“The government will undertake a competitive tender process to test the market on the capacity of a private operator to upgrade and operate the ASIC registry. The government will maintain ownership of the base data.”

The scoping study into another candidate for privatisation, the Intra Government Communications Network, has begun and its report is expected later this year.

The Finance Minister says the government has also resolved to sell off East Block, the headquarters of the National Archives, and West Block, which housed the Australian Electoral Commission’s head office until last Friday. It will retain ownership of the even-more-iconic sandstone Treasury building and its twin, the John Gorton Building, where Cormann’s department resides.

On the other side of the lake, ageing former public service haunts Anzac Park East and Anzac Park West (featuring a snazzy little detached restaurant) will also be sold, along with any regional properties deemed “surplus” such as a facility in Mount Macedon, Victoria, once used by the Australian Emergency Management Institute.

Vacant buildings leased by departments will now be managed at a whole-of-government level, which the government expects to save another $200 million over a decade, and Cormann set local hearts a flutter with his announcement that:

“The long-term accommodation needs of the Department of Immigration and Border Protection and local impacts will be considered as part of this review.”

Many residents of Belconnen, where the DIBP is located, have fears of a severe local downturn if the big department moves.

The government will, in fact, have 35 fewer entities following the fifth round of “smaller government” reforms, which include two mergers — the Department of Defence absorbs the Defence Materiel Organisation and the Freshwater Invertebrate Pests Subcommittee merges with the Invasive Plants and Animals Committee — while the South Australian government is taking over the functions of the Commonwealth’s Consumer Advocacy Panel, which stopped operating on January 30.

Cormann claims previous tranches of the “smaller government” reforms have already reduced the number of Commonwealth entities by 286 and saved $1.4 billion. From September 2013 to February 2015, the federal public service has shed over 17,300 jobs, he adds, “… mostly by natural attrition or voluntary redundancies”.

“The government has achieved its objective to reduce public service staffing levels below 2006-07 levels,” he said today.

*This article was originally published at The Mandarin

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