Senator the Hon Penny Wong
Minister for Finance and Deregulation
PW 253/11
29 November 2011
The Gillard Government will introduce a one-off increase to the efficiency dividend, to ensure government delivers better value for taxpayers.
For the next financial year, an additional 2.5 per cent efficiency dividend will apply. This will be on top of the existing efficiency dividend of 1.5 per cent. This measure will result in savings of $1.5 billion over the forward estimates.
In difficult economic conditions, which have seen global economic turbulence wipe an extra $20 billion from government revenues, the Government is determined to contribute to the savings task. Given the tight fiscal conditions and future budget pressures, it’s increasingly important that the public service continues to play its part.
This is one measure contributing to savings across Government in the 2011-12 MYEFO of $11.5 billion. These savings will deliver a net improvement to the budget bottom line of $6.8 billion over the forward estimates.
The savings in MYEFO come from a mix of spending cuts, deferrals of commitments and measures to improve the fairness and integrity of the tax system. This mix is appropriate for our current economic circumstances, striking the right balance between strong fiscal discipline and continuing to support job creation and growth.
Next year’s one-off increase in the efficiency dividend of 2.5 per cent will ensure the government pursues smarter and more efficient ways of conducting its core business.
The Government has tasked the Department of Finance and Deregulation with strengthening efforts across all departments to drive efficiency savings. Finance has prioritised the establishment of a dedicated unit – the Efficiency Improvement Branch – to assist in that role.
The Government expects agencies to find savings in a range of areas including:
We recognise smaller agencies, the CPSU and our ACT members have had concerns about how efficiency dividend measures impact on core operations of agencies such as our cultural institutions and the courts.
A small number of agencies will be exempt from the one-off increase in the efficiency dividend, following these consultations (list attached).
The Government’s strong expectation is that agencies will continue to meet the efficiency dividend without resorting to forced redundancies, or reduced services to regional Australia. We will require agencies to report on their efficiency measures.
A working group involving the Community and Public Sector Union, Australian Public Service Commission, Department of Prime Minister and Cabinet and the Department of Finance and Deregulation will advise on the implementation of this measure and wider public sector reforms including Senior Executive Service reforms. The group will be led by the Special Minister of State Gary Gray and report to Senator Wong.
This Government has a strong track record of identifying efficiency reforms, making responsible savings decisions. Since coming to Government, we have delivered government efficiency reforms of over $10 billion.
These include:
The efficiency dividend will return to 1.25 per cent in 2013-14 and 2014-15.
ATTACHMENT: Agencies exempt from additional 2.5% efficiency dividend
