Labor could cut some public service budgets by up to 5% as it hopes to make major savings in next year’s federal budget, but Jim Chalmers denied this would mean “big job cuts” for the sector.
The Treasurer, Jim Chalmers, and the Minister for Finance and the Public Service, Katy Gallagher, confirmed reports in the Australian Financial Review this week that Cabinet ministers and department and agency bosses have been asked to find significant budget savings.
But the government is not planning bureaucracy-wide cuts of that scale and will not change the mandatory 1% budget annual cut for all departments, known as the efficiency dividend.
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The Coalition has accused the government of breaking its promise not to make public sector cuts, following an election campaign in which the opposition promised to cut 41,000 posts in the federal workforce over five years. The Coalition’s policy was designed to achieve budget savings of $17.2 billion.
Chalmers said Wednesday that department and agency owners are being asked to find potential savings from lower priority expenses so the money can be redirected.
“It’s not something we would have done on this occasion,” he told ABC radio.
“We have done it in the lead up to our first four budgets. We are doing it in the lead up to our fifth budget.
“We are not asking departments to reduce their staff or cut their budgets by 5%. What we are asking them to do is identify areas of low priority spending so that we can redirect it if we wish.”
Chalmers said $100 billion in previous savings was used for new Medicare spending, including increased bulk billing, new urgent care clinics, as well as Labor’s income tax cut.
Chalmers left open the possibility of job cuts but said they would be smaller than those proposed by the opposition under Peter Dutton. “We are not asking departments to make the same big job cuts that our political opponents did in the last election,” he said.
This week Gallagher described the save as “an exercise in discipline”.
“The budget is in deficit. We’re under a lot of pressure on this. We can’t keep adding everything up.”
Melissa Donnelly, national secretary of the main public service union, the CPSU, warned Labor against major cuts.
“The federal government was re-elected with a promise to continue the work of investing in rebuilding public services, not cutting.
“While the government has made progress in repairing the damage done to public sector capacity after years of outsourcing, privatization and austerity, there is still much to be done.
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Donnelly pointed to large spending by private sector consulting firms and outsourced labor hire as areas of greater savings. Labor is working to reduce spending in these areas in the run-up to a 2022 election victory.
Before the election, Labor had said it would save more than $6 billion from the public service over an estimated four-year period.
Donnelly said, “The government’s stated support for the public service must be matched by what it actually provides.”
Opposition Leader Sussan Ley said Labor was breaking a promise to avoid cuts to Canberra-based public servants.
“Labour promised this city there would be no cuts. They made this promise before the last election.
“So are they going back on promises? Or have things gotten so bad since the election that they really have to address savings as a matter of urgency, cuts as a matter of urgency? So either they lied to you in the election or they’ve really mismanaged the budget.”
Greens public services spokesperson Barbara Pocock said Labor should be cutting consultation spending, not the public service budget.
“Arbitrary public sector cuts will lead to fresh spending on big consultants and labor hire at triple the cost. It makes no sense at all.”
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