Public sector staffing and efficiencies

Budget Review 2016–17 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 applied the ED at a rate of 2.5 per cent for 2015–16[1] and indicated that, from 2017–18, the Government would return the ED to a base rate of one per cent, subject to ongoing monitoring.[2] The 2016–17 Budget changes this approach, stating that the ED will be maintained at 2.5 per cent through 2016–17 and 2017–18 before being reduced to two per cent in 2018–19 and 1.5 per cent in 2019–20. The Government acknowledges ‘diminishing scope for new efficiencies as Australian Government agencies become leaner.’[3]

In a novel development for the ED, public sector agencies can anticipate, as part of the Government’s ‘transforming government’ agenda, a re-investment of a portion of the projected savings ($500.0 million) for ‘reforms which increase productivity and innovation … such as automation of public services and business re-engineering’. This will result in a total net ED saving of $1.4 billion over 2017–20.[4]

In addition to the ED, and continuing an approach in the 2014–15 and 2015–16 budgets, the 2016–17 Budget also specifies significant targeted savings measures including:

  • $74.5 million over five years (including $1.8 million in 2015–16) within the Department of Foreign Affairs and Trade (DFAT) and the Australian Trade and Investment Commission (Austrade)
  • $80.0 million over four years in the existing departmental funding of the Department of Human Services
  • $66.2 million over four years from 2016–17 in the Department of Health by introducing an advanced data analytics capability in relation to Medicare providers
  • $180.0 million over three years from 2017–18 in the Department of Immigration and Border Protection by reforming the visa and migration framework, improving automation in visa processing, providing self-service options and using more sophisticated assessment capabilities, and
  • $21.8 million over four years by reducing stand alone and co-located Australian Taxation Office (ATO) shopfronts in favour of myGov shopfronts, which will actively promote digital service delivery.[5]

One notable funding increase is in relation to the Australian Electoral Commission (AEC), which, in line with the expected 2016 Federal Election and recent changes to the Senate voting system, will receive an estimated $30.6 million increase in departmental funding together with estimated total special appropriations of $83.0 million (up from a $9.7 million special appropriation in 2015–16).[6]

Functional and Efficiency Reviews

Functional and Efficiency Reviews provide the Government with advice on opportunities to remove inefficiency or reduce expenditure. To date, the Government has undertaken 12 Reviews of agencies, with reported administrative and program savings of about $2.7 billion.

In 2016‒17, a further eight Reviews will examine the Department of the Prime Minister and Cabinet; the Department of Finance; the Treasury; the Australian Bureau of Statistics (ABS); the Department of Immigration and Border Protection; the Australian Federal Police; the Bureau of Meteorology; and the Murray Darling Basin Authority and water-related functions within other Government agencies. It is foreshadowed that recommendations of past and upcoming Reviews may be considered in future budget processes, and may lead to reductions in staffing.

Organisational consolidations and abolitions

Agency Resourcing: Budget Paper No. 4: 2016–17 indicates a reduction of 34 Australian Government organisations, through consolidation or cessation, as at November 2015 and into 2016–17. However, the 34 organisations are not identified.

Reversing an earlier intention to abolish the Office of the Australian Information Commissioner (OAIC),[7] the agency has been funded through to 2020, with privacy and Freedom of Information functions to be restored to the OAIC.[8] 

Property portfolio, lease holdings and procurement

In the 2015‒16 Budget the Government committed to progressing property divestment ‘where appropriate’.[9] This process will continue, with $2.6 million provided over three years from 2016‒17 to extend the non-Defence property divestment program. The anticipated savings from this measure are not published in the Budget papers for commercial confidentiality reasons.

‘Operation Tetris’ requires public sector agencies to fill vacant leased office space in the ACT rather than entering into new leases or renewing expiring leases. The Government credits Tetris with ensuring that ‘over 42,000 square metres of previously vacant leased office space in and around Canberra has been filled’; the measure is expected to deliver savings of almost $200 million over 2016–26. With approximately 55 per cent of Government leases scheduled to end over the next three years, Operation Tetris will be extended nationally.

The Government will provide $3.0 million in 2016‒17 for the establishment of mandatory whole-of-government coordinated property procurement arrangements for Non-Corporate Commonwealth Entities.[10] The coordinated procurement arrangements will cover the leasing of office space, purchasing of property and facilities management, some capital works and utility services. The savings for this measure are not published in the Budget papers for commercial confidentiality reasons.[11]

Two measures arise out of Australia’s participation in the Trans-Pacific Partnership (TPP). The Government will provide $12.4m over four years from 2016‒17 to upgrade IT systems to support ‘greater transparency in the reporting of procurements conducted by limited tendering’, and $2.9 million has been allocated to enable the Federal Court of Australia to perform a role in relation to disputes over procurement decisions.[12]  


The Government will seek to maintain the size of the General Government Sector (GGS),[13] excluding military and reserves, around or below the 2006–07 level of 167,596 Average Staffing Level (ASL).[14] The GGS ASL for 2016–17 is estimated to be 166,155 (16,350 less than the peak of 182,505 ASL in 2011–12), but actual ASL may be lower depending on, for example, the outcomes of Functional and Efficiency Reviews. The estimated GGS ASL for 2015–16 (166,765) is very close to the projected ASL for 2016–17.

Significant reductions include 305 ASL at the Department of Immigration and Border Protection, 344 ASL at the Department of Social Services, and 918 ASL at the Department of Human Services.[15] Following savings announced in March 2016,[16] four of Canberra's national cultural institutions will lose 63 ASL in 2016–17.[17] The AEC is projected to have a reduction of 18 ASL.

ASL at the ABS will reduce by 41, but both the ABS and the Department of Employment will have temporary increases in ASL to support investment in information technology systems at the ABS and to implement the Youth Employment Package. These temporary arrangements are to assist the agencies to ‘implement policy changes and build infrastructure needed to achieve automation and other longer term efficiencies.’  

There are some notable substantive staffing increases. ASL at the ATO is projected to increase by 539, which may be related to the establishment of a new Tax Avoidance Taskforce,[18] and the National Disability Insurance Scheme Launch Transition Agency (NDIA) is projected to increase by 646.

Looking beyond 2016–17, a key element in the Government’s future strategy to contain staffing numbers is a decision that the number of permanent public service positions in the NDIA will not reach 10,595 in 2018–19 (as previously planned), but will be limited to a maximum of 3,000. Accompanying this new staffing profile is an intention to ‘use more efficient non-government models to achieve the same outcomes.’[19]

Enterprise agreements

The salaries of the majority of public servants are determined in agency enterprise agreements. In general, agreements made in 2011 had a nominal expiry date of 30 June 2014,[20] and new workplace bargaining arrangements were released in March 2014.[21] Negotiations for new agreements have been protracted, and have included the issuing of a revised bargaining policy in November 2015.[22] On 18 April 2016, the Australian Public Service Commission announced that, to that date, 50 new enterprise agreements had been agreed to by agencies and their staff (19 of these in the preceding three months).[23] However, as at 3 May 2016 enterprise agreements were not in place at three agencies with significant numbers of employees, namely the Department of Human Services, the Department of Defence, and the Australian Taxation Office.[24]

[1].          P Hamilton,‘Australian Public Service staffing and efficiencies’, Budget review 2015–16, Research paper, 2014–15, Parliamentary Library, Canberra, May 2015.

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

[3].          The budget figures and information in this brief have been taken from the following document unless otherwise sourced: Australian Government, Agency resourcing: budget paper no. 4: 2016–17, p. 2-5, 7, 11, 93, 131-133, 135-137, and 139-140.

[4].          Australian Government, Budget measures: budget paper no. 2: 2016–17, p. 71.

[5].          Ibid., pp. 21, 97 104, 140 and 149.

[7].          M Neilsen,‘Law and justice—Commissions’, Budget review 2014–15, Research paper, 2013–14, Parliamentary Library, Canberra, May 2014.

[8].          Budget measures: budget paper no. 2: 2016–17, op. cit., p. 69.

[9].          Agency resourcing: budget paper no. 4: 2015–16, op. cit., p. 4.

[10].       A Non-Corporate Commonwealth Entity (NCE) is a Commonwealth entity that is not a body corporate. Unlike, for example, statutory authorities and Commonwealth-owned companies, NCEs are not legally and financially separate from the Commonwealth. Department of Finance, ‘Resource Management glossary - non-corporate Commonwealth entity (NCE)’, Finance website.

[12].       Ibid., p. 71.

[13].       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: 2016–17, 2016, p. 9-38.

[14].       Average Staffing Level (ASL is 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 often be higher than the ASL figure.

[16].       H Belot, ‘Cultural institutions forced to find extra $40m in savings’, The Age, 29 March 2016, p. 5.

[17].       The four agencies are the National Film and Sound Archive, the National Gallery of Australia, the National Portrait Gallery, and the National Library of Australia, where the loss of 28 positions is attributed to a decline in revenue from external sources.

[18].       S Morrison (Treasurer) and K O’Dwyer (Assistant Treasurer), A new Tax Avoidance Taskforce, media release, 3 May 2016, and N Towell, ‘No respite from the tough times’, The Canberra Times, 4 May 2016, p. 3.

[19].       For additional background information, see M Fifield, ‘Answer to Question without Notice: National Disability Insurance Scheme’, [Questioner: Z Seselja], Senate, Debates, 18 August 2015, p. 5555.

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

[22].       APSC, ‘Bargaining policy 2015’, APSC website.

[24].       N Towell, ‘Rejected workplace deal ‘best on offer’’, The Canberra Times, 15 March 2016, p. 1, and N Towell, ‘Department of Defence staff reject revised enterprise agreement, again’, The Canberra Times, 4 May 2016, p. 6.


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