Labor's Hidden Job Cuts and Unfunded Redundancies

MC 13/13

Senator the Hon. Mathias Cormann
Minister for Finance

Hon. J.B. Hockey

Senator the Hon. Eric Abetz
Employment Minister and Minister Assisting the Prime Minister for the Public Service

Date: Tuesday, 19 November 2013

More evidence of Labor’s budget deception has emerged, with advice showing the former Government concealed almost 14,500 public service job cuts initiated before the last election.

Labor’s forward estimates, as revealed in the independent Pre-Election Fiscal Outlook, included funding reductions, but never exposed the extent of Australian Public Service (APS) job cuts that would be needed as a result.

Department of Finance advice showed that the former Government’s policy settings and savings measures were expected to result in around 14,500 total job cuts across the public service. 

This was never made clear to the Australian people before the election.

The forward estimates funding profile translates into 8,819 fewer APS jobs, implicit in the staffing expenditure forecasts. The extent of these staff reductions was never fully publicly revealed.

This reduction - combined with another 846 jobs from “more efficient management structures”  and 4,808 through the “Additional Efficiency Dividend to 2.25 per cent” - took the total reduction in public sector staff to 14,473, according to the advice.

Labor only included a small provision for 800 redundancies for one of these measures in the budget – leaving agencies to find the rest of the savings without specific reforms or funded redundancies.

This has forced a large number of departments and agencies to offer voluntary redundancies, for which they were not funded by the former Government and which has pushed some of them into operating losses.

Labor’s blanket and secret staffing cuts were also largely untargeted, making no distinction between higher or lower priority areas of spending and having no regard to the financial health of different parts of government.

This is yet another sneaky budget surprise, a clandestine public service cut.

The Government, which is methodically working to turn around Labor’s economic and budget mismanagement in preparing the Mid-Year Economic and Fiscal Outlook, has had to recalibrate our approach to tidy up Labor’s mess and sort out their unfunded redundancies.

In contrast to Labor’s secret staff cuts, the Coalition took to the election an additional reduction of 12,000 in the public service through natural attrition. However we will review the timing and approach to this further reduction to take into account the impact of Labor’s secret public service cuts.

The Coalition Government will also ensure that any reductions match reforms to the size and shape of government flowing from the Commission of Audit.

We will write to the Commission’s chair, Mr. Tony Shepherd AO, to make sure any proposed reforms are based on effective staffing and that these are linked to efficient services.

This must be done responsibly through deliberate choices about priority areas, the proper functions of government and the opportunities to reform the way we can deliver services.