Australian Public Service staffing and efficiencies

Budget Review 2015–16 Index

Philip Hamilton

Efficiency measures and targeted savings

In place for over 25 years, the efficiency dividend (ED) is an annual funding reduction for Australian government agencies, in general applied only to ‘departmental’ expenses. The ED has usually been applied at a rate of either 1.00 or 1.25 per cent; in some years governments have increased the rate, with the highest ED rate being four per cent. The 2015–16 Budget provides that, as efficiencies are increasingly being sought from targeted, known areas of inefficiency in specific agencies, from 2017–18 the Government will return the ED to a base rate of one per cent, subject to ongoing monitoring.[1] The Budget does not specify the ED rate over 2015–17; in 2013 the previous Government set the ED at 2.25 per cent for 2014–17, and in the 2014–15 Budget the current Government increased the rate by a further 0.25 per cent for 2014–15, 2015–16, and 2016–17.[2]

The proposed reduction in the ED will be welcomed by public service managers and commentators who have long argued that, after more than 25 years, there are few substantial savings to be achieved by a blunt instrument such as the ED, and that the ED has placed particular burdens on smaller agencies.[3]

The Government’s use of targeted savings began in the 2014–15 Budget, with the targeting of agencies’ communications and public affairs functions.[4] Specific targeted savings identified in the 2015–16 Budget include:

  • $31.4 million over two years from 2017–18 by consolidating agencies’ Enterprise Resource Planning Systems; that is, agencies’ ‘back‑office’ IT systems.[5] This is consistent with a recommendation of the National Commission of Audit in 2014, and the example of the current Shared Services Centre (SSC), which provides services to the Education and Industry departments and some of their portfolio agencies.[6]
  • An expansion of coordinated procurement arrangements for ICT products and services, including software licensing, for estimated whole-of-government net savings of $13.7 million over four years from 2015–16.[7]
  • $55.1 million over four years from 2015–16 in the Human Services portfolio by ceasing, from 1 July 2015, the payment to the Australian Taxation Office for the Child Support Lodgement Enforcement Programme, and by changing mechanisms for payments by Centrelink, Medicare and the Pharmaceutical Benefits Scheme.[8]
  • $13.2 million over five years will be sought through efficiencies to arts and cultural programmes administered by the Australia Council, Screen Australia and the Attorney-General’s Department (AGD). Savings of $54.2 million over five years from 2014–15 will also be achieved through a reduction in departmental funding for AGD and efficiencies in a range of administered programmes. Current funding levels will be maintained for the Family Relationship Services Programme, Grants to Australian Organisations Programme, the Australia New Zealand Counter Terrorism Committee, and payments to the International Criminal Court. There will also be a redirection of funding for discretionary legal assistance to ensure a more targeted approach.[9]

The Government has also commenced Functional and Efficiency Reviews to determine whether the functions of departments and large agencies are aligned with the Government’s policy priorities, and whether they are working as efficiently as possible. Two such reviews have examined the departments of Health and Education and Training. As a result, in Health the Government expects net savings of $96 million through efficiencies in contracting, corporate, staff and property costs. Education and Training is to achieve savings of $131 million by ceasing and redesigning programmes; $7.6 million of this is in the operations of the department.[10] After the Budget, further recommendations from the Education and Training review will be considered, focussing on the department’s administrative costs. In 2015–16, Functional and Efficiency Reviews will be undertaken of the departments of Agriculture, the Environment, Foreign Affairs and Trade, Treasury, Attorney-General’s and Social Services, as well as the Australian Taxation Office and the Australian Bureau of Statistics.[11]

Funding for whole-of-government measures

The 2015–16 Budget includes expenditure measures that are significant for the whole public service. The Budget provides $254.7 million over four years from 2015–16 to the Communications portfolio to support the initial implementation of Digital Transformation Agenda (this includes savings redirected from other portfolios—$120 million in over five years from 2014–15).[12] The first phase of the Agenda will include: improved myGov services; a Digital Service Standard to make services faster and easier to use; and a new service to simplify the process of registering a business.[13] In addition, funding of $106.8 million over four years is allocated to establish a whole-of-government grants administration process.[14] The Digital Transformation Office (DTO) will be established as a new Executive Agency in the Communications portfolio, with $95.4 million over four years from 2015–16, although staffing levels for the DTO are yet to be determined.[15]

Extending a measure in the 2010–11 Budget, the Department of Finance will be funded to further redevelop the Central Budget Management System (CBMS) that underpins the budget and financial management of the Government. The financial impact of this measure is not disclosed.[16] Delays in the CBMS project have been canvassed at Senate Estimates.[17]

Staffing

From September 2013 to February 2015 over 17,300 public servants left the Australian Public Service, with the Government providing $212 million to 38 agencies to assist with redundancies.[18] In 2015–16, reductions in staffing levels are expected in a number of portfolios, notably a net reduction of some 1,000 ASL as the Defence Materiel Organisation is merged into the Department of Defence.[19] Relatively significant reductions will also occur at the Australian Broadcasting Corporation and the Bureau of Meteorology. Staffing at the Clean Energy Finance Corporation is projected to reduce from 54 to 30 ASL, anticipating the abolition of the Corporation from 31 December 2015.[20]

The 2015–16 Budget forecasts that, for 2015–16, total staffing will return to the level last recorded in 2006–07 as measured across the General Government Sector (GGS) excluding military personnel and reserves: the total ASL for 2015–16 is estimated to be 167,340, but this may drop depending on further Functional and Efficiency Reviews and efficiency measures through 2015.[21] Notably, this is very close to the total ASL for 2014–15 (167,411 ASL). Overall, staffing reductions will be offset by temporary increases in particular areas, for example, in the ABS.[22]

More broadly, the recruitment ‘freeze’ introduced in November 2013 will end. From 1 July 2015, agency heads will be able to recruit without seeking approval from the Australian Public Service Commission, although this will be subject to ongoing monitoring by the Commission.[23]

Enterprise agreements

The salaries of the majority of public servants are determined in agency enterprise agreements. In general, the agreements made in 2011 included a nominal expiry date of 30 June 2014.[24]

New workplace bargaining arrangements were released in March 2014.[25] In December 2014, the Prime Minister made a commitment that ‘no public sector worker will be paid at a higher rate of increase than our defence forces.’[26] At that time, the offer to defence personnel was 1.5 per cent per year (later increased to two per cent); for the public service, the December 2014 Mid-Year Economic and Fiscal Outlook statement noted the Government’s ‘intention to keep average annual wage rises across the public service to 1.5 per cent or less over the next three years’.[27] In contrast, the major union representing public servants is seeking a 4 per cent pay increase each year.[28]

Early in May 2015, it was reported that ‘most [agencies] are offering a pay increase of about 1 per cent a year’ and that no new enterprise agreements had been signed.[29] In an escalation of the apparent stand-off in negotiations, on Budget day the public sector union commenced a series of stop-work meetings that will affect a number of agencies. This prompted media coverage predicting that the APS ‘is facing its worst industrial strife for 30 years.’[30]

According to the Opposition, the 2015–16 Budget provides that public sector wages will increase by only 1.49 per cent by 2018–19, which is less than inflation. Suggested consequences include a wage freeze or ‘thousands more public sector workers sacked by 2018–19.’



[1].          Australian Government, Budget measures: budget paper no. 4: 2015–16, p. 3.

[2].          C Bowen (Treasurer) and P Wong (Minister for Finance and Deregulation), Economic statement August 2013, media release, 2 August 2013; Australian Government, Budget measures: budget paper no. 2: 2014–15, p. 69.  

[3].          N Horne, The Commonwealth efficiency dividend: an overview, Background note series, 2012–13, Parliamentary Library, Canberra, 2012.

[4].          Budget measures: budget paper no. 2: 2014–15, op. cit., p. 113.

[5].          Australian Government, Budget measures: budget paper no. 2: 2015–16, p. 70.

[6].          National Commission of Audit, Towards responsible government: appendix: volume 2, March 2014, p. 247;
Shared Services Centre (SSC), ‘Introducing the Shared Services Centre’, SSC website.

[7].          Budget measures: budget paper no. 2: 2015–16, op. cit., p. 94.

[8].          Ibid., p. 115.

[9].          Budget measures: budget paper no. 2: 2015–16, op. cit., p. 59.

[10].       Budget measures: budget paper no. 4: 2015–16, op. cit., p. 2.

[11].       Ibid.

[12].       Budget measures: budget paper no. 2: 2015–16, op. cit., pp. 67–68.

[13].       Australian Government, Overview: budget 2015, 2015, p. 28.

[14].       Budget measures: budget paper no. 2: 2015–16, op. cit., p. 68; see also Interim Digital Transformation Office (DTO), ‘Better grants administration’, DTO website.

[15].       Budget measures: budget paper no. 2: 2015–16, op. cit., pp. 67–68; Budget measures: budget paper no. 4: 2015–16, op. cit., p. 139.

[16].       Budget measures: budget paper no. 2: 2015–16, op. cit., p. 91.

[17].       Senate Finance and Public Administration Legislation Committee, Official committee Hansard, 20 November 2014, pp. 125–9.

[18].       Budget measures: budget paper no. 4: 2015–16, op. cit., p. 129.

[19].       Ibid., p. 134. The Budget papers report staffing numbers in terms of Average Staffing Level (ASL), a method of counting that adjusts for casual and part-time staff in order to show the average number of full-time equivalent employees. ASL is almost always a lower figure than a headcount of actual employees so, when staff are shed, the number of individuals who leave the public service will be higher than the ASL figure.

[20].       Budget measures: budget paper no. 4: 2015–16, op. cit., pp. 129, 133, 135, 139 and 141. A Bill to abolish the Corporation has been in the Senate since March 2014.

[21].       Total ASL for 2006–07 is estimated to be 167,596: ibid., p 131. The General Government Sector comprises departments and agencies that provide public services which are mainly non-market in nature, mainly for the collective consumption of the community, involving the transfer or redistribution of income and financed mainly through taxes and other compulsory levies.  Australian Government, Budget measures: budget paper no. 1: 2015–16, 2015, p. 9-33.

[22].       Budget measures: budget paper no. 4: 2015–16, op. cit., pp. 129–31.

[23].       Ibid., p. 129.

[24].       Australian Public Service Commission (APSC), Australian Public Service bargaining framework: supporting guidance, APSC, Canberra, 2011, p. 8.

[25].       APSC, ‘Australian government public sector workplace bargaining policy’, APSC website.

[26].       T Abbott, ‘Answer to Question without notice: Minister for Defence’, [Questioner: B Shorten], House of Representatives, Debates, 1 December 2014, pp. 13674-75.

[27].       T Abbott (Prime Minister) and N Andrews (Minister for Defence), Joint press conference: Joint Operations Command Centre, Carwoola, transcript, 4 March 2015; Australian Government, Mid-Year Economic and Fiscal Outlook 2014–15, p. 26.

[28].       Community and Public Sector Union (CPSU), ‘CPSU bargaining claim 2014’, CPSU website, p. 1.

[29].       M Mannheim, ‘Only one in five bureaucrats back strikes‘, Canberra Times, 7 May 2015, p. 1.

[30].       N Towell, ‘Biggest PS 'fight' in 30 years‘, Canberra Times, 2 May 2015, p. 1.

 

All online articles accessed May 2015. 

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