Federal Treasurer Joe Hockey has all but conceded that the Abbott government has no chance of fulfilling its pledge to only use ‘natural attrition’ to lose 12,000 jobs in the public service after it was revealed that the Australian Taxation Office will shed at least 3000 positions on top of the 900 redundancies forced by Labor’s efficiency dividend.

The mass layoffs have been reported as part of an interview with the Treasurer by The Australian newspaper as the government begins the process of selectively revealing news ahead of the official release of the Coalition’s first Budget on Tuesday.

The Tax Office was always anticipated to be a prime target for retrenchments after voluntary redundancies offered to staff at the revenue agency were strongly oversubscribed.

It is believed that many of the positions set to be terminated are likely to come from a combination of outsourcing to commercial financial services and accounting services firms as well as major labour shedding resulting from technology driven automation.

It is still unclear whether the government will opt for simultaneous overhauls of massive mainframe driven computer systems at both Centrelink and Tax, however some technology industry sources believe there is scope to kill two birds with one stone by co-developing new systems on shared ‘on-demand’ infrastructure that uses cloud computing.

A big cost to government agencies over the past 20 years has been capacity utilisation of heavy computing capacity – like that used to churn through tax returns at the end of financial year – could be improved by as much as 80 per cent by the creation of a so-called ‘government cloud’ that agencies could draw on as required.

However the efficiency increase in capacity utilisation could naturally displace the thousands of staff now needed to run maintain, support and develop existing legacy systems.

It is understood that software firm SAP remains a frontline contender to pick up a reworking of core government transactional systems after a series of successes in the retail banking sector.

Other companies understood to be heavily tilting at new government work include SAP’s arch rivals Oracle and IBM as well as search, mobile and advertising giant Google and Amazon Web Services that has invested heavily in new local infrastructure that scrubs up to Defence and ASIO security standards.

The likelihood that more basic taxation administration work could be sent to the private sector is also also take a heavy toll on jobs, however it is unclear ATO whether staff would be offered transfers to new providers.

The Abbott government has also selectively let slip that it will, as foreshadowed in the Commission of Audit, consolidate border security and control functions under a super agency known as the ‘Australian Border Force’ that will send border protection functions from Customs to the Department of Immigration.

Less clear is how Custom’s existing revenue collection functions will be affected by the switch that so far appears most strongly focused on preventing unauthorised arrivals to Australia, however it now also appears likely that jobs could also go in the consolidation.

Unions are furious about the latest revelations of the mass sackings lying, with Community and Public Sector Union National Secretary Nadine Flood telling ABC radio that there was no way cuts of such a big scale would not hit frontline customer service.

More to come...

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