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]
Staffing
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]
All online articles accessed May 2016.
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