Public Service issues

Budget Review 2008-09 Contents

Budget 2008 09: Public Service issues

Australian Public Service

Deirdre McKeown and Cathy Madden
Politics and Public Administration Section


During the 2007 federal election campaign the Australian Labor Party announced, as part of its savings strategy, that it would impose a one-off two per cent efficiency dividend on most government agencies. This would be in addition to the existing 1.25 per cent efficiency dividend resulting in an efficiency dividend of 3.25 per cent for the 2008 09 financial year.[1]

The then Shadow Minister for Finance, Lindsay Tanner, also announced that the base for the efficiency dividend would exclude the operational areas of the Department of Defence and agencies specifically affected by other Labor savings proposals . Mr Tanner noted that current vacancy rates, turnover, and attrition will ensure that redundancies will not be necessary to achieve these efficiency savings .[2]

During the preparation of the 2008 Budget, statements by the Government on the need to find budget savings led commentators to predict that large spending cuts would be made which could have an impact on government programs.[3] There was also speculation that the budgets of a number of small cultural institutions, such as the National Library of Australia, the National Gallery of Australia and the National Museum of Australia, would be severely affected by the additional efficiency dividend.[4]

The predicted size of the budget cuts and the possible loss of talent from the Australian Public Service (APS) were compared by some with the severity of public sector cuts introduced in the early Coalition Government budgets.[5] The first Coalition Government Budget forecast that the average staffing level (ASL) would decline by 1737 in 1996 97 and that:

it is expected that the total number of people employed (full time and part time and temporary staff) under the Public Service Act will decline by some 10,500 between 30 June 1996 and 30 June 1997.[6]

Australian Public Service Commission (APSC) figures show that during 1996 97 the separation of permanent APS staff totalled 15 471 the two major types of separation being resignations (4135) and retrenchments (10 070).[7]

2008 09 Budget measures

The Budget forecasts that the application of the additional one-off two per cent efficiency dividend to the departmental funding of most Government agencies will generate savings of $1.8 billion over five years.[8] The effect of these savings on individual departments and agencies is considered in other sections of this Budget Brief.

Budget estimates of average staffing levels[9] of agencies in the Australian Government general government sector show a total reduction of 1224 staff across Australia.[10] There is speculation that approximately one third (or 400) of these staff are based in Canberra.[11]

The total ASL for all general government sector agencies for 2008 09 is 246 993 compared with 248 217 for 2007 08.[12]

The following is a select list of ASL changes forecast for departments and agencies. It should be noted that departments and agencies determine their own staffing levels subject to resourcing requirements. At the time of writing, departments and agencies are still considering how to implement the efficiency dividend.[13] The following figures should be read in the context of the total ASL for departments and agencies.[14]

Reductions in ASL in departments and agencies 2008 09

  • Department of Defence (civilian 474)
    • Defence Materiel Organisation (210)
    • Department of Veterans Affairs (195)
    • Australian War Memorial (8)
  • Department of Education, Employment and Workplace Relations (213)
  • Department of Families, Housing, Community Services and Indigenous Affairs (269)
  • Department of Health and Ageing (179)
  • Department of Human Services including the Child Support Agency (445)
    • Centrelink (200)
    • Medicare Australia (171)
  • Department of Immigration and Citizenship (221)
  • Department of Innovation, Industry, Science and Research (142)
    • Commonwealth Scientific and Industrial Research Organisation (85)
  • Department of Infrastructure, Transport, Regional Development and Local Government (50)
  • Department of the Treasury: Australian Taxation Office (1137)
    • Australian Bureau of Statistics (166)

Increases in ASL in departments and agencies 2008 09

  • Attorney-General s Department (50)
    • Australian Security Intelligence Organisation (186)
    • Australian Customs Service (146)
  • Department of Agriculture, Fisheries and Forestry (70)
  • Department of Defence: military (1591) and reserves (385)
  • Department of the Prime Minister: Department of Climate Change (140)[15]
  • Department of the Treasury: Australian Competition and Consumer Commission (89)

Budget reaction

Argument has centred on whether the total number of APS staff cuts of 1224 is misleading. The Australian Financial Review comments that:

The civilian job cuts spread across portfolio departments and key agencies amount to more than 4100, offset by gains in some departments and agencies.[16]

Senator Gary Humphries (Lib, ACT) suggests that the loss of public service jobs is higher than the Budget forecast:

Overall, the Government has cut more than 3,000 public service jobs, yet by adding some extra uniformed personnel to Defence, they have been able to pretend the net loss is only 1,224. This is obviously false, because project managers, communications officers and HR people can't just put down their pens and take up heavy artillery. These new Defence jobs are not ones that can be filled by retrenched public servants, they will have to be filled from outside the service. Therefore the overall number of jobs to be lost is far higher than the Government would have us believe.[17]

The Community and Public Sector Union suggests that 3200 non-defence Australian public service positions will be lost . The CPSU also criticises the application of the efficiency dividend across all public sector agencies:

Some savings can be found, but the blunt, one-size-fits all efficiency dividend is not useful in building a dynamic, creative public service needed to deliver for Australia s long term challenges.[18]

Senator Humphries has also attacked the imposition of the 3.25 per cent efficiency dividend:

There is also the imposition of the two per cent efficiency dividend on government agencies. It is worth remembering that Labor, when in opposition, said that the efficiency dividend of 1 per cent was lazy budgeting, it was badly targeted, and it did not give people the chance to distinguish good programs from poorly run programs. Labor have now upped it to 3 per cent. How does that work out?[19]

The ACT Chief Minister, Jon Stanhope, supports the Budget ASL estimates and suggests that the Budget cuts have not hit the ACT as hard as had been expected. He said:

We've come out of it far better than we were lead to believe we would. I don't believe the stringencies here in the ACT are nearly as tough as some of the rhetoric we faced in the lead up to the delivery of this budget, so discussions of meat axes and massive job losses simply haven't come to pass.[20]

Mr Stanhope anticipates that the ACT Public Service will absorb many of the APS redundancies.

Career Transition and Support Centre

On 28 March the Special Minister of State, Senator Faulkner, announced the establishment of a Career Transition and Support Centre (CTSC) to assist agencies manage staff reductions. The Minister stated that the government wanted to ensure that excess staff are provided with opportunities to stay in the Public Service, enable the Public Service to retain experienced and qualified staff and redeploy them to areas of need and minimise the requirement for compulsory retrenchment.[21]

The Government has provided $2.5 million over two years to the Australian Public Service Commission (APSC) to establish and operate the CSTC. The funding includes $0.1 million in capital funding. The Centre acts as both a referral and a recruitment agency. It is to operate on a partial cost-recovery basis, with agencies paying a standard referral fee of $2200 for each employee. The APSC estimates that there will be 350 cases in 2008 09.[22]

The CSTC will work with agencies to provide advice on implementing the Redeployment Principles, which are aimed at ensuring a consistent whole-of-government approach to managing excess staff across the Public Service.[23] By the establishment of the CTSC the Government aims to reduce the adverse effects of the Budget measures and show its commitment to the retention of skills and experience in the APS.[24] The Government s approach to managing staff reductions and redeployment has been welcomed by the Community and Public Sector Union.[25]

The Career and Support Centre commenced operations on 1 May 2008.

Ministerial and Opposition staff

In line with its election commitment, the Rudd Government has reduced the number of ministerial and opposition personal staff by 30 per cent.[26] This move will result in savings of $126.3 million over five years. [27] The number of ministerial staff had increased from 294 in May 1996 to 445 in 2006. The reduction in staff will result in a return to 1996 staffing levels.

[1]. Lindsay Tanner, Labor delivers on savings , media release, 22 November 2007.

[2]. ibid.

[3]. See, for example, Steve Lewis, Rudd s razor horror , Daily Telegraph, 27 February 2008; Lindsay Tanner, Stephen Jones and Peter Dutton, PM program, ABC Radio, 6 February 2008.

[4]. For example, James Massola, Culture vultures: Rudd razor gang targets Canberra s cultural institutions , Canberra Times, 21 February 2008.

[5]. For example Michelle Grattan, The PM sees public service in brighter light , Age, 2 May 2008; Matthew Franklin, Hundreds of PS jobs will go , Australian, 7 May 2008.

[6]. Australian Government, Part 1: Budget outlays overview , Budget Paper No. 1 1996 97,
p. 3-42.

[7]. Australian Public Service Commission, Australian Public Service statistical bulletin 2006-07, Commonwealth of Australia, Canberra.

[8]. Australian Government, Part 2: Expense measures , Budget Paper No 2: Budget Measures 2008 09, Commonwealth of Australia, Canberra, 2007, p. 321.

[9]. Note that average staffing level figures reflect the average number of employees receiving salary or wages over the financial year, with adjustments for casual and part-time staff, to show full-time equivalent. This also includes non-uniformed staff and overseas personnel.

[10]. Australian Government, Statement 6: Expenses and Net Capital Investment , Budget Paper No 1: Budget Strategy and Outlook 2008 09, Commonwealth of Australia, Canberra, 2007,
p. 6 64.

[11]. See Mark Uhlmann, ACT public sector job losses may reach 1100 , Canberra Times, 15 May 2008.

[12]. General government sector encompasses agencies that provide public services that are mainly non-market in nature and are either for collective consumption by the community (for example, defence and law and order) or redistribute income (for example, social security payments), and are financed mainly by taxes.

[13]. For example Budget Paper no. 1 forecasts that the Australian War Memorial (AWM) will lose eight ASL. The AWM confirmed that it will look at its core activities but not to the detriment of staff. See ABC News Online, Institutions come to terms with budget cuts ,, accessed on 16 May 2008.

[14]. Budget Paper no. 1 2008 09, op. cit., pp. 6 60 6 64.

[15]. The ASL figures for the Department of the Prime Minister and Cabinet do not reflect the administrative changes announced by the Special Minister of State, Senator John Faulkner, on 1 May 2008. The National Archives of Australia and Old Parliament House will move to the portfolio as executive agencies.

[16]. Verona Burgess, Bureaucrats adjust to slimming cure , Australian Financial Review, 15 May 2008.

[17]. Senator Gary Humphries, Canberra foots the bill for Swan s spend-a-thon , media release, 14 May 2008.

[18]. Community and Public Sector Union, Budget 2008 , CPSU media release, 14 May 2008.

[19]. Senator Gary Humphries, Matters of Public Interest: Budget 2008-09 , Senate, Debates, 14 May 2008, p. 43.

[20]. ABC News Online, Stanhope sigh of relief over Budget ,, accessed on 16 May 2008.

[21]. Senator Faulkner, Special Minister of State, APS career Transition and Support Centre , media release, 28 March 2008.

[22]. Australian Government, Portfolio Budget Statement 2007 08: Budget Related Paper No. 1.15A Prime Minister and Cabinet portfolio, p.112.

[23]. Australian Public Service Commission, Services for agencies: redeployment arrangements

[24]. Senator Faulkner, Special Minister of State, APS Career Transition and Support Centre , media release, 13 May 2008.

[25]. Andrew Fraser, Moves to dull razor gang s pain , Canberra Times, 2 April 2008.

[26]. Lindsay Tanner, Address to the National Press Club , media release, 8 August 2007.

[27]. Australian Government, Part 2: Expense measures , Budget Paper No 2: Budget Measures 2008 09, Commonwealth of Australia, Canberra, 2007, p. 355.