Budget Review 2022–23 Index

Philip Hamilton

Efficiency Dividend

Since 1987–88 successive Australian governments have applied an Efficiency Dividend (ED) to ‘departmental’ (operating) expenses of Australian Government agencies, reducing funding to account for increased public sector productivity over time. The ED reduces the base departmental funding of agencies by the ED rate prior to the addition of any new measures. The ED rate is not always explicitly stated in the Budget because, rather than being a budget measure, the ED is a factor determined and applied by the Government in the course of developing the Budget.

The ED rate has varied to some degree over the years, but has been most frequently applied at a rate of either 1.00 or 1.25%, with the highest being 4% in 2012–13. In most budgets since 2014–15 the ED rate has been 2.0% or 2.5%. Over time, various agencies have been fully or partially exempted from the base and/or one-off rates.

The ED is not discussed in the 2022–23 budget papers, nor was it mentioned in the 2021–22 or 2020–21 budget papers. The most recent coverage of the ED was prior to the COVID-19 pandemic. The Mid-Year Economic and Fiscal Outlook 2019–20 (MYEFO) of December 2019 anticipated (p. 202):

the Government will achieve savings of $1.5 billion over four years by maintaining the Efficiency Dividend (ED) at the 2018–19 level of 2.0 per cent for two additional years (2019–20 and 2020–21), stepping down to 1.5 per cent in 2021–22 and returning to the base rate of 1.0 per cent from 1 July 2022.

The 2019–20 MYEFO also noted ED exemptions for several specific agencies, national collecting institutions, and agencies with an Average Staffing Level of less than 200 (p. 202).

Staffing

When discussing public sector employees, budget papers use 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, which is the method of counting staff used by the Australian Public Service Commission (APSC).

In the 2015–16 Budget, the Government undertook to maintain the size of the general government sector (GGS), excluding military and reserves, at around or below the 2006–07 ASL of 167,596 (2016–17 BP4, p. 132). Critics, notably the Opposition and the main public sector union, refer to this policy objective as the ASL cap or the staffing cap.

In October 2020, the Government reported that ASL had been maintained at around or below the 2006–07 level over the years prior to the COVID-19 pandemic, but foreshadowed that ‘significant ASL increases will occur in a number of portfolios in 2020–21 … However much of this additional ASL is temporary, reflecting the nature of the response to COVID-19’ (2020–21 BP4, p. 18). The 2021–22 Budget foreshadowed that ASL would increase to 174,276 (5,364 above the updated estimate for 2020–21), and that ‘over the medium and longer term, there will be modest underlying ASL growth as Australia recovers its equilibrium’ (2021–22 Budget Paper No. 4, pp. 14, 15).

Budget 2022–23

The Minister for Finance has reported that ASL has increased, but less than expected:

In this Budget, the Government has agreed a moderate uplift in Average Staffing Level (ASL) to 173,558, which is 416 above the updated estimate for 2021–22. … While the increase in 2022–23 ASL is slightly above the latest 2021–22 estimate, it is 718 below the original expected peak forecast in the 2021–22 Budget, reflecting the difficulties some agencies had with recruiting stemming from the strong labour market and as a result of COVID-19 related lockdowns in 2021. (BP4, pp. 16-17)

Labour hire contractors

Since 2018 media reports have highlighted concerns that, for example, ‘Government agencies have more than doubled their spending on contracted labour in the last five years’. In November 2021 the report of a Senate inquiry into the capability of the APS noted the very limited publicly-available data about labour hire in the APS, in terms of expenditure and headcount. The main public sector union told the inquiry that ‘at least 20 000 APS positions are filled on a labour hire basis’ (pp. 25, 27).

However, consistent with responses in previous years, in Budget Paper 4 the Government observes that ‘over the 4 years from 2022–23, the departmental funding provided to administer government services is declining as an overall share of total government expenses’ (BP4, p. 18).

ASL changes in selected portfolios

The Government attributes ‘the main longer term structural change [in staffing] at a portfolio level’ to the build-up of Defence capacity (BP4, p. 18). It has been reported that:

The government plans to add 18,500 personnel to Defence by 2040, at a cost of $38 billion. Two-thirds of the growth will be on the military side. Civilian numbers are projected to grow by 990 ASL (average staffing level) in 2022–23 to a total of 16,991. The equivalent number for the military is ASL increasing by 2,201 to 62,063.

In addition, the Government has decided on ‘a temporary continuance of peak ASL resources’ in some portfolios to ‘sustain Australia’s strong recovery from the COVID-19 pandemic, bolster Australia’s national security, support jobs creation and improve essential services’ (BP4, pp. 16-17). In that context, the Government notes (but does not quantify) ‘new ASL resources’ for specific functions and activities in the following portfolios:

•   Agriculture, Water and the Environment, in relation to Australia’s Antarctic science capability, and the response to the Independent Review of the Environment Protection and Biodiversity Conservation Act 1999.
•   Defence, in relation to the Sovereign Guided Weapons and Explosive Ordnance Enterprise, the National Naval Shipbuilding Enterprise, and the AUKUS trilateral security pact
•   Health, for the COVID-19 vaccine program, and to extend the National Incident Centre and
•   Home Affairs, for security agencies to address ‘risks posed by high risk terrorist offenders and strengthen Australia’s defences against transnational, serious and organised crime’. (BP4, p. 17)

In the Social Services portfolio, ‘new ASL resources’ are ascribed to Services Australia (for the response to the 2022 flood events in Queensland and northern New South Wales), and the National Disability Insurance Agency (for delivery of services under the National Disability Insurance Scheme). (BP4, p. 17) However, tables in Budget Paper 4 that compare staffing in 2021–22 and 2022–23 show NDIA staffing remaining static, and Services Australia staffing declining by 2,719. (BP4, p. 160) It is not clear why NDIA staffing remains static.

For Services Australia, the 2021–22 Budget estimated that ASL would be 26,838, whereas in the 2022–23 Budget the actual ASL for 2021–22 is 28,869, an increase of 2,031. The Social Services Portfolio Budget Statements 2022–23 (PBS) states ‘the 2021–22 Average Staffing Level (ASL) includes a one-off increase of 2,031 ASL for administration of the COVID-19 Disaster Payments’ (DSS PBS, p. 171). This temporary increase of ASL in 2021–22 may have been covered by two payment measures:

•   $451.1 million in the 2021–22 MYEFO for Services Australia to administer the COVID-19 Disaster Payment in 2021–22 (2021–22 MYEFO, p. 286) and
•   $450.0 million in the 2022–23 Budget for Services Australia to administer the Pandemic Leave Disaster Payment, Australian Government Disaster Recovery Payment and Disaster Recovery Allowance in 2021–22 (BP2, p. 166).

The cessation of this temporary measure would account for 2,031 of the ASL decline of 2,719 reported in Budget paper 4 (p. 160).

Genomics Australia

In the context of the Government’s 10 year Medical Research Future Fund (MRFF) plan, the Budget allocates $28.1 million over 4 years from 2022–23 to establish Genomics Australia (GA) in the Health portfolio from 1 January 2024. A legislated corporate Commonwealth entity, GA will ‘drive the translation and integration of genomics into the Australian healthcare system’. (BP2, p. 93)

APS Hubs

Prior to the COVID-19 pandemic, Coalition Government budgets would often include public service decentralisation measures. Without using the term ‘decentralisation’, as noted in the media in this Budget the Government has allocated $15.2 million over 7 years to pilot Australian Public Service (APS) Hubs across regional Australia. The Hubs will ‘provide office accommodation for APS staff to work from regional areas, and promote the APS as an employment option to regional Australians’. (BP2, p. 153)

Parliament

Response to the Independent Review into Commonwealth Parliamentary Workplaces

The report of the Independent Review into Commonwealth Parliamentary Workplaces conducted by Sex Discrimination Commissioner Kate Jenkins (the Review) was released in November 2021. Initiatives in response to the Review’s recommendations were included in the 2021–22 MYEFO (p. 217), and the Budget includes a further $4.1 million for measures in 2022–23:

•   Department of the Prime Minister and Cabinet: $2.6 million to design and establish an Office of Parliamentarian Staffing and Culture (OPSC), and to undertake preparatory work toward an Independent Parliamentary Standards Commission
•   Department of Parliamentary Services (DPS): $0.8 million for an OPSC shopfront at Parliament House, and a feasibility study into a Parliamentary Health and Wellbeing Service (PHSW)
•   Australian Public Service Commission: $0.6 million to expand the Parliamentary Workplace Support Service (BP2, p. 64)

In addition, the Department of Finance will review workplace policies and practices, and ‘accessibility and inclusion measures within Commonwealth Parliamentary Workplaces’. DPS will provide input in relation to the Parliamentary precinct. (BP2, p. 64)

Security

In recent years, media reports from Australia, the United States and the United Kingdom have documented threats of violence, and actual violence, against parliamentarians and parliaments.

Since 2014–15, a number of security upgrade initiatives have been undertaken at Parliament House, and these are summarised and discussed in a performance audit tabled by the Australian National Audit Office in June 2021. The Budget includes a measure that will further upgrade security at Parliament House:

The Government will provide $29.7 million over 4 years from 2022–23 (including $2.7 million in operating funding) and $0.8 million per year ongoing to purchase and maintain security assets at the Australian Parliament House, including enhancements to the CCTV network, upgraded screening equipment and an expanded Parliamentary Security Operations Room. (BP2, p. 154)

 

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