Public service

Budget Review 2012–13 Index

Dr Nicholas Horne

Background

Public service staffing

The Budget gives an estimate of 258 563 average staffing level (ASL) for agencies in the general government sector (GGS) for 2012–13 and a revised estimate for 2011–12 of 261 637 ASL (down from 262 995 in the 2011–12 Budget).[1] ASL is not a headcount but rather a figure showing full-time equivalent staffing levels.

In April 2012 the Prime Minister indicated that public service employment would be one of the ‘tough choices’ in the Budget process.[2] From late 2011 staffing reductions have been reported for various agencies; at Senate Estimates in February 2012 some agencies also flagged possible staffing reductions in connection with the efficiency dividend increase (see further below).[3]

Efficiency dividend increase and capital funding reduction

In the November 2011 Mid-Year Economic and Fiscal Outlook (MYEFO) the Government announced that the efficiency dividend would rise by 2.5 per cent from its current annual rate of 1.5 per cent to four per cent for the 2012–13 financial year only; the increase is expected to result in savings of $1.5 billion over 2012–15.[4] A number of agencies have been exempted from the increase including the Australian Communications and Media Authority, the Australian War Memorial, the National Library of Australia, the National Gallery of Australia, the Federal Court, and the High Court.[5]

The Government expects that agencies will ‘continue to meet the efficiency dividend without resorting to forced redundancies, or reduced services to regional Australia’; agencies will also be required ‘to report on their efficiency measures’.[6] Specific areas of expenditure identified for savings including consultant and contractor use, travel, hospitality and entertainment, media and advertising, printing and publication, and training.[7]

The efficiency dividend is not only applied to Australian Public Service agencies (such as the main Departments of State) but also to non-Australian Public Service agencies within the GGS such as the Australian Federal Police and the parliamentary departments.

In the MYEFO the Government also announced a 20 per cent reduction in departmental capital funding over 2012–15 for those agencies in receipt of such funding; significant capital projects of more than $10.0 million will not be affected by the reduction.[8] The reduction is expected to result in savings of $710.0 million over 2012–15.[9]

2012–13 Budget measures

Public service staffing

Over the course of the 2012–13 financial year the Budget estimates:

  • total ASL reductions for GGS agencies of 6562 ASL, and
  • total ASL gains for GGS agencies of 3487 ASL.

Overall the Budget estimates a net decrease of 3074 ASL from 2011–12 levels (261 637 ASL). The Minister for Finance and Deregulation has stated that the decrease is ‘[o]verwhelmingly … a result of natural attrition and voluntary redundancies’.[10]

The largest projected ASL reductions for 2012–13 are for the Department of Education, Employment and Workplace Relations (DEEWR) (-1145 ASL), the Australian Taxation Office (-1039 ASL), the Australian Bureau of Statistics (-680 ASL), the Department of Human Services (-440 ASL), the Defence Materiel Organisation (-432 ASL including contractors), the Department of Climate Change and Energy Efficiency (-344 ASL), the Department of the Prime Minister and Cabinet (DPMC) (-196 ASL), Department of Defence civilian staff (-192 ASL including contractors), and the Australian Customs and Border Protection Service (-190 ASL).[11] Together these account for 71 per cent of the total estimated ASL reductions for 2012–13.

The largest projected ASL gains for 2012–13 are for Department of Defence military and reserve staff (+754 and +400 ASL respectively), the Department of Industry, Innovation, Science, Research and Tertiary Education (DIISRTE) (+729 ASL), the new Clean Energy Regulator (+278 ASL), the Department of Families, Housing, Community Services and Indigenous Affairs (+162 ASL), and the new Office of the Fair Work Building Industry Inspectorate (OFWBII) (+155 ASL). Together these account for 71 per cent of the total estimated ASL increases for 2012–13.

The Budget indicates that some ASL changes (for example those for DEEWR, DIISRTE, DPMC and the OFWBII) are related to transfers of responsibilities or functions.[12]

For 2012–13 the Budget estimates an increase of $296.0 million (1.6 per cent) in gross wage and salary expenses for the GGS compared to 2011–12; a reduction of $164.0 million (just under one per cent) is projected for 2013–14 followed by increases over 2014–16. These figures substantially revise the November 2011 MYEFO estimate of a $667.0 million (3.4 per cent) reduction in gross wage and salary expenses for 2012–13 followed by small increases over 2013–15.[13]

Efficiencies and savings

The Budget confirms the 2.5 per cent increase in the efficiency dividend rate for 2012–13 announced in the November 2011 MYEFO (expected to save $1.5 billion over 2012–15).[14] The Budget also identifies various other savings including:

  • $5.4 billion in the Defence portfolio over 2012–16 arising from acquisition deferral, capital equipment adjustment, and operational efficiencies
  • $184.9 million in the Education, Employment and Workplace Relations portfolio over 2011–16 from efficiencies associated with the establishment of the OFWBII, efficiencies in employment services arrangements, and program consolidation, and
  • $19.0 million in the Attorney-General’s portfolio over 2012–16 from efficiencies associated with the transfer of National Native Title Tribunal functions to the Federal Court of Australia.[15]

In his response to the Budget the Leader of the Opposition questioned staffing levels in the Defence Materiel Organisation and indicated that the Coalition would impose annual savings targets on agencies if in government.[16]



[1].       The budget figures in this brief have been taken from the following document unless otherwise sourced: Australian Government, Budget Strategy and Outlook: Budget Paper No. 1: 2012–13, Commonwealth of Australia, Canberra, 2012, pp. 6–54, 6–72–6–77, 9–3, viewed 11 May 2012. The general government sector ‘comprises all government departments, offices and some other bodies’ and ‘provides public services that are mainly non-market in nature and for the collective consumption of the community, or involve the transfer or redistribution of income’: ibid., p. 9–13.

[2].       J Gillard (Prime Minister), Transcript of press conference: Parramatta, media release, 4 April 2012, viewed 11 May 2012.

[3].       For example E Hannan and A Hepworth, ‘$1.5bn cuts ‘will slash 3000 jobs’’, The Australian, 30 November 2011, viewed 11 May 2012; M Mannheim, ’14,000 PS jobs set to be slashed’, The Canberra Times, 1 February 2012, viewed 11 May 2012; C Lucas and M Mannheim, ‘Public servants face axe in $500m budget cuts’, The Age, 5 April 2012, viewed 11 May 2012; T Negus, ‘Senate Legal and Constitutional Affairs Legislation Committee: Additional Estimates’, Senate, Debates, 14 February 2012, pp. 103–105, viewed 11 May 2012.

[4].       Australian Government, Mid-Year Economic and Fiscal Outlook 2011–12, Commonwealth of Australia, Canberra, 2011, viewed 11 May 2012, p. 216. The pre-existing rate of 1.5 per cent per annum was itself an increase from the base annual rate of 1.25 per cent; the increase to 1.5 per cent was announced in April 2011 and is intended to apply over 2011–13 before returning to 1.25 per cent: P Wong (Minister for Finance and Deregulation), Driving efficiencies in government, media release, 21 April 2011, p. 1, viewed 11 May 2012.

[5].       P Wong (Minister for Finance and Deregulation), Driving efficiency savings within government, media release, 29 November 2011, pp. 2–3, viewed 11 May 2012.

[6].       Ibid., p. 2.

[7].       Wong, Driving efficiency savings within government, op. cit., pp. 1–2.

[8].       Australian Government, Mid-Year Economic and Fiscal Outlook 2011–12, op. cit., p. 301.

[9].       Australian Government, Mid-Year Economic and Fiscal Outlook 2011–12, op. cit., p. 301.

[10].      P Wong (Minister for Finance and Deregulation), Delivering better government services, more efficiently, media release, 8 May 2012, p. 1, viewed 11 May 2012.The Minister also noted the existing cap on senior executive staffing.

[11].      A reduction of at least 1000 civilian staff (including contractors) is estimated for the Department of Defence over 2012–16; figures vary in the Budget papers: see Budget Measures: Budget Paper No. 2: 2012–13, Commonwealth of Australia, Canberra, 2012, p. 298, viewed 11 May 2012; Portfolio budget statements 2012–13: budget related paper no. 1.5A: Defence portfolio, Commonwealth of Australia, Canberra, 2012, p. 36, viewed 11 May 2012. The reduction is to be ‘effected primarily through natural attrition and tightening of recruitment practices’: Australian Government, Budget Measures: Budget Paper No. 2: 2012–13, op. cit., p. 298.

[12].      Australian Government, Budget Strategy and Outlook: Budget Paper No. 1: 2012–13, op. cit., pp. 6–76–6–77.

[13].      Australian Government, Mid-Year Economic and Fiscal Outlook 2011–12, op. cit., p. 304.

[14].      Australian Government, Budget Strategy and Outlook: Budget Paper No. 1: 2012–13, op. cit., p. 1–13.

[15].      Australian Government, Budget Measures: Budget Paper No. 2: 2012–13, op. cit., pp. 87, 111–12, 116, 123, 298.

[16].      T Abbott (Leader of the Opposition), ‘Second reading speech: Appropriation Bill (No. 1) 2012–2013’, House of Representatives, Debates, 10 May 2012, pp. 82–86, viewed 11 May 2012.

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