Senator the Hon Mathias Cormann
Minister for Finance
MATHIAS CORMANN: Well it has been confirmed in Senate Estimates this morning by the Secretary of the Department of Finance, David Tune, that as a result of decisions made by the former Labor government there will be nearly 14,500 job cuts across the Public Service. These are Labor’s secret public sector job cuts. These are cuts which were not disclosed to the Australian people before the last election. These are cuts that the Parliamentary Budget Office was not able to consider when putting together the costings of the Coalition’s policy to reduce the size of the Public Service by 12,000 through natural attrition. Indeed these are cuts, which the Coalition wasn’t able to consider because they weren’t properly disclosed by the former government before the last election. What that means for the government is that we will now have to reassess the way we implement our policy to achieve further reductions in the size of the Public Service. In particular, we will be considering advice from the Commission of Audit to ensure any further cuts are properly targeted and properly prioritised. A final point to make here, not only were those secret public sector cuts of the former government not disclosed before the election, they weren’t properly funded either. The former government did not have an overall plan to properly implement the redundancies that are now taking place as a result of their decisions before the election by only providing funding for redundancies for about 800 positions when of course as a direct result, according to the advice from Mr Tune, as a direct result of decisions of the previous government, about 14,500 public servants are expected to lose their jobs.
QUESTION :Senator, inaudible … abandon your commitment to the efficiency dividend that Labor introduced?
MATHIAS CORMANN: Obviously we said in the lead up to the election that we would adopt those savings measures put into the Economic Statement by the previous government, but of course what we didn’t have before the election was information about the impact of some of those measures on public sector jobs. So what we’ve said responsibly today is that now that we have that advice, now that we have that information, we will properly consider the impact of those decisions made by the previous government on our commitment to achieve further reductions in the size of the Public Service.
QUESTION: Is there an option B you’re abandoning the efficiency dividend once the Commission of Audit
MATHIAS CORMANN: We are not proposing to abandon previous efficiency dividends. The point I’m making is, the Parliamentary Budget Office didn’t know, the Coalition didn’t know and the Australian people didn’t know that the previous government was planning to make public sector cuts to the tune of 14,500 positions. These are Labor’s secret public sector cuts which were never properly disclosed at a time when they were criticising the Coalition for wanting to achieve a reduction in the size of the Public Service by 12,000 through natural attrition.
QUESTION: Did you not suspect it though. I mean the Public Sector Union put out a lot of press releases giving estimates of 5,000 job cuts here etc. on the back of these dividends.
MATHIAS CORMANN: We acted in good faith based on the information that was available in the Pre-election Economic and Fiscal Outlook. And we acted in good faith based on the costings advice that was provided to us by the Independent Parliamentary Budget Office. The independent Parliamentary Budget Office costed our policy to reduce the size of the Public Service by 12,000 through natural attrition, but of course they did not have the benefit of this information, which Labor clearly deliberately kept secret from the Australian people before the last election.
QUESTION: So will you be able to save any of the $5.2 billion at all.
MATHIAS CORMANN: We remain committed to achieve a reduction in the size of the Public Service through natural attrition. We are obviously going through the process of updating Budget Estimates, the Mid-Year Economic and Fiscal Outlook and we'll provide information about the cost of Labor’s secret public sector job cuts. In the lead up to the 2014 /15 Budget we will have the benefit of advice from the Commission of Audit on how further reductions in the size of the Public Service may be able to be achieved in the most sensible and the most appropriately targeted way.
QUESTION: The three components of the 14,000 jobs include 8,800 that are not part of the efficiency dividend. They are something else. I’m not clear on what they are; can you explain what the 8,800 jobs to be lost over the forward Estimates actually are?
MATHIAS CORMANN: The previous government decided to reduce funding across government, across a whole range of programs which had implicit in them, reductions in staff numbers. But the government never provided explicit advice on what those consequent reductions in staff numbers would be. The only advice that was provided by the former government before the election was in relation to 846 staff cuts in terms of so-called more efficient management structures.
QUESTION: So with those 8,800 are implicit, sort of implied, reductions. Why can’t they be reduced through natural attrition?
MATHIAS CORMANN: The advice that I have is that many of the reductions, because of the size of the reductions imposed by the previous government in the shadow of the last election, will require redundancies. Indeed over the last few weeks people across Canberra and indeed people across Australia would have noticed that there were redundancies taking place. Those redundancies are as a result of the decisions made by the former government before the last election, decisions that were overwhelmingly not disclosed by the former government before the election.
QUESTION: Just to clarify, you are committed to axing 26,000 jobs; Labor’s 14,000 plus your 12,000.
MATHIAS CORMANN: We have only found out after the election advice that was previously undisclosed that as a result of decisions made by the Labor party before the last election there would be a reduction in the size of the Public Service to the tune of about 14,500. We took a policy to the last election which we declared openly and transparently, which was to reduce the size of the Public Service by 12,000 through natural attrition. Now that we have the information in front of us about the impact of Labor’s secret public sector cuts we obviously have to assess that impact in the context of the commitment we’ve made and we will review the timing and the appropriate approach in terms of our policy moving forward and in that context, very specifically, we will be considering advice from the Commission of Audit on how any further reductions in the size of the Public Service can be most appropriately managed.
QUESTION: Senator you’ve had this advice now since September; it’s November now, why are we only hearing about it now?
MATHIAS CORMANN: We have Senate Estimates this week and obviously there was some evidence provided yesterday by the Parliamentary Budget Office. There was evidence provided last night by the Australian Public Sector Commission. There was some evidence provided this morning by the Secretary of the Department of Finance. So obviously the Budget will be updated in the usual way in the Mid-Year Economic and Fiscal Outlook. That is the way it normally happens, but obviously in the context of Senate Estimates some of that information would come to light.
QUESTION: Will you be looking at reducing funds from other areas in a bid to fund the redundancies?
MATHIAS CORMANN: There is no doubt that as a result of Labor not properly funding the redundancies that are required as a result of their decisions, there will be a hit on the Budget bottom line. But obviously we are going through the process now of properly quantifying that impact on the Budget bottom line and the up-date on what that impact is exactly will be provided in the Mid-Year Economic and Fiscal Outlook.
QUESTION: You’ve been saying for a long time that the public sector is too big and you want to act on that issue, that’s been your position. Now you’ve been advised about some difficulties in reaching that and you seem to be pulling back from your target. Why can’t you do your cuts on top of their cuts, that’s the position you took to the election?
MATHIAS CORMANN: We are not pulling back at all. In the first five years of the Labor government the size of the Public Service increased massively by more than 20,000. But in the shadow of an election, in the months leading into the election, Labor made a whole series of savings decisions with implications for public sector jobs which were undisclosed prior to the election. Now that we have the information about the impact of those decisions on public sector jobs, obviously as a responsible government we will take those into account as we re-calibrate the commitment we took to the last election and that is the work that is currently underway.
QUESTION: Do you have any empathy or sympathy for the case that Qantas is putting at the moment with the Capital raising by Virgin amounting to unfair competition?
MATHIAS CORMANN: These are matters in the first instance for Qantas to obviously prosecute. If we have something to say about that we’ll say it. At the moment I don’t have any comment in relation to the issues that have been raised by Qantas.
QUESTION: Do you think that just as a free market Liberal yourself; do you think that Qantas being bound by the Sales Act is fair in this day and age in aviation?
MATHIAS CORMANN: I’m not going to make any ad hoc pronouncements in relation to these matters. You are quite right, I think that all other things being equal the free market is the best way to go, but I’m not going to make any ad hoc comments in relation to the specific issues that have been raised by Qantas in the public domain. If the government has something to say, we’ll say it.