The Abbott government has pulled back from a further wave of mass retrenchments to the Australian Public Service in its first Budget, claiming that it will eliminate a total of 16,500 across the forward estimates – inclusive of Labor’s 14,500 retrenchments.

But there’s a catch and it’s a big one.

Buried on the second last line of a list of 20 “major savings” set out in the Budget overview is “a further temporary increase of 0.25 per cent” to the much maligned efficiency dividend that has been the source of such enduring pain for the Australian Public Service.

According to the Budget’s figures the temporary increase will save the government’s bottom line $569 million by 2017-18 raising clear questions as to how departments will find those savings.

Asked about the impact of the 25 basis point hike in the efficiency dividend, Finance Minister Mathias Cormann said that when Labor had imposed its efficiency dividends “they were trying to make a deep budget deterioration look less bad which led to the loss of 14,500 positions across the federal public service.”

Far more ambitious is Senator Cormann’s estimate that “general public service expenses” will decrease by 33.6 per cent in real terms from 2013-14 to 2014-15, a clear sign of the ruthless impact of the Labor’s efficiency dividend.

Public service expenses are then scheduled to fall by just 7.5 per cent over the period 2014-15 to 2017-18.

“What we are saying is that we will reduce the public service by a further 2000 positions. That is based on deliberate decisions in relation to deliberate savings and efficiencies in particular areas.”

But details of precisely where those savings may be are still sketchy and emerging.

“The previous government applied a blanket rule across the board,” Mr Cormann said. “We are going into department by department, agency by agency, government body by government body and looking at functions and making decisions on how public services can be better delivered so that taxpayers around Australia don’t have to pay more for their public services than they should.”

The Budget overview says that the public service “streamlining” will result in each individual portfolios now looking for “line by line savings” as well as “undertaking efforts to reduce expenditure on staff.”

At the same time, the Budget Measures paper says that savings will be targeted “in areas such as reduced advertising, consultancy and travel costs and deregulation efficiencies.”

Adding to a shortfall of detail, the Budget overview similarly says that the Abbott government is “systematically assessing whether government functions should be open to competition and outsourced.”

That analysis, coupled with the hard hitting recommendations from the National Commission of Audit, could result in the really big cuts not coming in this Budget but next year after the machinery of government changes are pushed through.

“This process will lead to new private sector opportunities and more efficient and effective service delivery,” the Budget overview says.

Delivering his Budget address Treasurer Joe Hockey said that “a smaller less, interfering Government won’t need as many public servants,” but hastened to add that the “16,500 staff will leave over the next few years without compromising frontline services.”

During the Treasurer’s press conference, Mr Hockey batted away questions on the level of funding to the states and any potential rise in the Goods and Services Tax to forthcoming white papers on the Federation and Taxation in Australia.

“If we are going to get rid of the duplication between levels of government we have to accept responsibility for the things that we run,” Mr Hockey said, lamenting that the federal government still ran one hospital in Tasmania – a hangover from the last days of the Howard government.

“The states run schools, the states run hospitals. The previous government suggested that Canberra was a honey pot for the states and therefore tried to buy political benefit out of [funding] education and hospitals. It’s unsustainable at the end of the day,” Mr Hockey said.

“It’s got to be fixed.”

Those fixes don’t appear to be coming cheaply for the states.

Asked directly if states could lose between $21 billion to $22 billion over the next 10 years – and whether he expected states and territories would cover that amount or if it would come from an increase to the GST, Mr Hockey said states were getting more money than before over the next 4 years.

Budget overview documents say that the government is will adopt “sensible” indexation arrangements for schools from 2018, and hospitals from 2017-18 as well as “removing funding guarantees for public hospitals.”

“These measures will achieve cumulative savings of over $80 billion by 2024-25,” the documents say.

Also on the chopping block are a swag of Commonwealth payments claimed to be “ineffective or [which] duplicate state responsibilities.”

In the cross hairs are the National Partnership Agreements on Preventive Health, Improving Public Hospital Services and “Certain Concessions for Pensioners and Seniors Card”.

Holders.

“The States will be expected to continue contributing to these arrangements at their expense,” the Budget papers say.

Pre-leaked predictions come true

Having softened the ground for a rash of privatisations and sell-offs, the Abbott government has come good on much of its ‘off the shelf’ promises to abolish, merge or dispose of government functions it sees as wasteful or duplicated.

On the abolition front, the savings are underwhelming cutting just $500 million over the forward estimates.

“In recent years the number of different government bodies has grown out of control,” a statement from Finance Minister Mathias Cormann said. “There are now so many different Commonwealth bodies that there is no actual authoritative and definitive figure.”

While the absence of a big number to cut could well be down to no looking or counting hard enough, the Finance minister said that after the National Commission of Audit estimated around 900 bodies, the Department of Finance subsequently found another 100 in its own Budget preparations.

Meanwhile, predictions that Defence Housing Australia, the Royal Australian Mint , Australian Hearing and the registry functions of ASIC have all been earmarked for sale with scoping studies set to soon commence.

For anyone hoping that the bad news is all out and over, bad things always come in threes.

“The third and most comprehensive phase of consolidation in the number of government bodies will be considered by the government in time for inclusion in the MYEFO 2014-15,” Senator Cormann’s statement said.

Second wave of APS retrenchments put on hold… at least for now

Third and biggest wave of agency amalgamations scheduled for MYEFO 2014-15

Julian Bajkowski

The Abbott government has pulled back from a further wave of mass retrenchments to the Australian Public Service in its first Budget, claiming that it will eliminate a total of 16,500 across the forward estimates – inclusive of Labor’s 14,500 retrenchments.

But there’s a catch and it’s a big one.

Buried on the second last line of a list of 20 “major savings” set out in the Budget overview is “a further temporary increase of 0.25 per cent” to the much maligned efficiency dividend that has been the source of such enduring pain for the Australian Public Service.

According to the Budget’s figures the temporary increase will save the government’s bottom line $569 million by 2017-18 raising clear questions as to how departments will find those savings.

Asked about the impact of the 25 basis point hike in the efficiency dividend, Finance Minister Mathias Cormann said that when Labor had imposed its efficiency dividends “they were trying to make a deep budget deterioration look less bad which led to the loss of 14,500 positions across the federal public service.”

Far more ambitious is Senator Cormann’s estimate that “general public service expenses” will decrease by 33.6 per cent in real terms from 2013-14 to 2014-15, a clear sign of the ruthless impact of the Labor’s efficiency dividend.

Public service expenses are then scheduled to fall by just 7.5 per cent over the period 2014-15 to 2017-18.

“What we are saying is that we will reduce the public service by a further 2000 positions. That is based on deliberate decisions in relation to deliberate savings and efficiencies in particular areas.”

But details of precisely where those savings may be are still sketchy and emerging.

“The previous government applied a blanket rule across the board,” Mr Cormann said. “We are going into department by department, agency by agency, government body by government body and looking at functions and making decisions on how public services can be better delivered so that taxpayers around Australia don’t have to pay more for their public services than they should.”

The Budget overview says that the public service “streamlining” will result in each individual portfolios now looking for “line by line savings” as well as “undertaking efforts to reduce expenditure on staff.”

At the same time, the Budget Measures paper says that savings will be targeted “in areas such as reduced advertising, consultancy and travel costs and deregulation efficiencies.”

Adding to a shortfall of detail, the Budget overview similarly says that the Abbott government is “systematically assessing whether government functions should be open to competition and outsourced.”

That analysis, coupled with the hard hitting recommendations from the National Commission of Audit, could result in the really big cuts not coming in this Budget but next year after the machinery of government changes are pushed through.

“This process will lead to new private sector opportunities and more efficient and effective service delivery,” the Budget overview says.

Delivering his Budget address Treasurer Joe Hockey said that “a smaller less, interfering Government won’t need as many public servants,” but hastened to add that the “16,500 staff will leave over the next few years without compromising frontline services.”

During the Treasurer’s press conference, Mr Hockey batted away questions on the level of funding to the states and any potential rise in the Goods and Services Tax to forthcoming white papers on the Federation and Taxation in Australia.

“If we are going to get rid of the duplication between levels of government we have to accept responsibility for the things that we run,” Mr Hockey said, lamenting that the federal government still ran one hospital in Tasmania – a hangover from the last days of the Howard government.

“The states run schools, the states run hospitals. The previous government suggested that Canberra was a honey pot for the states and therefore tried to buy political benefit out of [funding] education and hospitals. It’s unsustainable at the end of the day,” Mr Hockey said.

“It’s got to be fixed.”

Those fixes don’t appear to be coming cheaply for the states.

Asked directly if states could lose between $21 billion to $22 billion over the next 10 years – and whether he expected states and territories would cover that amount or if it would come from an increase to the GST, Mr Hockey said states were getting more money than before over the next 4 years.

Budget overview documents say that the government is will adopt “sensible” indexation arrangements for schools from 2018, and hospitals from 2017-18 as well as “removing funding guarantees for public hospitals.”

“These measures will achieve cumulative savings of over $80 billion by 2024-25,” the documents say.

Also on the chopping block are a swag of Commonwealth payments claimed to be “ineffective or [which] duplicate state responsibilities.”

In the cross hairs are the National Partnership Agreements on Preventive Health, Improving Public Hospital Services and “Certain Concessions for Pensioners and Seniors Card”.

“The States will be expected to continue contributing to these arrangements at their expense,” the Budget papers say.

Pre-leaked predictions come true

Having softened the ground for a rash of privatisations and sell-offs, the Abbott government has come good on much of its ‘off the shelf’ promises to abolish, merge or dispose of government functions it sees as wasteful or duplicated.

On the abolition front, the savings are underwhelming cutting just $500 million over the forward estimates.

“In recent years the number of different government bodies has grown out of control,” a statement from Finance Minister Mathias Cormann said. “There are now so many different Commonwealth bodies that there is no actual authoritative and definitive figure.”

While the absence of a big number to cut could well be down to no looking or counting hard enough, the Finance minister said that after the National Commission of Audit estimated around 900 bodies, the Department of Finance subsequently found another 100 in its own Budget preparations.

Meanwhile, predictions that Defence Housing Australia, the Royal Australian Mint , Australian Hearing and the registry functions of ASIC have all been earmarked for sale with scoping studies set to soon commence.

For anyone hoping that the bad news is all out and over, bad things always come in threes.

“The third and most comprehensive phase of consolidation in the number of government bodies will be considered by the government in time for inclusion in the MYEFO 2014-15,” Senator Cormann’s statement said.

Comment below to have your say on this story.

If you have a news story or tip-off, get in touch at editorial@governmentnews.com.au.  

Sign up to the Government News newsletter