Check Government News after 7pm for dedicated Budget 2014 coverage and analysis

Treasurer Joe Hockey appears to have secured a near term victory over the hard-right faction of the Coalition after the Abbott government effectively admitted a push to for a second major tranche public service of job shedding on top of Labor’s big cull was not immediately feasible.

Faced with the prospect of a debilitating systemic shock to the public sector and deep electoral hostility over cuts to frontline agencies like Centrelink, the government is expected today ton give significant ground in the battle over the scale of public service cuts.

Only hours before the first Abbott government Budget is released, backgrounding has begun to quell growing fears that as many as 26,500 Australian Public Service will be axed. The new figure being shopped around is now a loss of 16,000 positions – still a big topline number but one that most importantly is inclusive of the previous Labor government’s hated ‘efficiency dividend cuts’ that were projected as long as two years ago to be equate to the loss of 14,500 jobs.

The Coalition had initially promised to axe a chest beating extra 12,000 public service jobs in the election campaign, ostensibly without realising or factoring in the scale of impact of Labor’s efficiency dividend.

The overshoot in the Coalition’s numbers came despite a conspicuous brawl in the lead up to the 2013 election between the Community and Public Sector Union (CPSU) and the then Labor government over the scale of efficiency dividend cuts. The fight resulted in the powerful bureaucrat’s union temporarily withdrawing campaign support for the ALP –despite the union being affiliated with the party..

In a key signal sent by the Treasurer, Fairfax Media’s The Australian Financial Review has suggested that the net increase over Labor’s APS cuts could be limited to just 1500 jobs.

Part of the government’s pre-Budget stage-setting, the credible reports from authorised sources suggest that a so-called ‘third wave’ of APS consolidation will be revealed around November.

It has been reported that the November announcement would map out the biggest machinery of government (MoG) changes in terms of public sector reform, primarily agency and departmental consolidations and abolitions.

The November reforms would come on top of the close 40 agency abolitions that came immediately post-election. Those abolitions are expected to be followed by another 50 abolitions that the Government is already shopping to parts of the media.

Confronted with the horror cumulative cuts figure of 26,500, the Abbott government opted to give the hospital pass of estimating the level of retrenchments back the National Commission of Audit for review.

Despite persistent government grandstanding that many thousands of APS jobs were created by wasteful, inefficient and ineffective Labor policy initiatives simply had to be cut, Commission of Audit chairman Tony Shepherd subsequently poured cold water on the prospect of mass sackings after he cautioned on ABC’s Lateline program that a deficit levy combined with big cuts would not be the way to go.

Mr Shepherd’s comments have subsequently been interpreted as clear warning that the Abbott government risked putting Australia’s fragile economic growth into reverse gear if it went in too hard with public service cuts.

It is also understood that the level of negative public and business reaction that followed the fresh revelation that the Australian Taxation Office will sack 3000 staff took many Coalition members by surprise. A big fear is from small businesses and sole traders worried their commercial activities will be adversely impacted if the ATO becomes more difficult and time consuming to deal with.

Although unions will not be cheering, the likely retreat from the spectre of another major round of mass sackings by the Abbott government represent a big victory of sorts for the CPSU which is now locked in a pitch battle for both its own survival as well as trying to negotiate a new industrial instrument for the APS after the existing enterprise agreement exercise

The sheer scale of 26,500 job losses would have heavily hit the unions base membership, thus weakening its power to negotiate over the longer term.

In the event that the government does give ground and reduce the scale of cuts, it is likely that there will be a push for a trade-off on pay increases and conditions.

Public Service Minister Senator Eric Abetz has essentially offered public servants a ‘zero-per cent’ increase unless productivity gains are realised.

Even though the offer of no pay rise equates to a pay-cut after inflation, the Abbott government has made a point of freezing the pay of elected representatives and the most senior public servants in an effort to show the those at the top are willing to share the pain, or at least the publicity about pain.

Check Government News after 7pm for dedicated Budget 2014 coverage and analysis.

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