Public sector facing huge cuts in Budget

ScreenHunter_2356 May. 09 09.51

By Leith van Onselen

More details have emerged about the large cull about to take place across the federal public service.

According to The Australian, up to 70 government agencies will be either scrapped or merged, with four major bodies – including the Royal Australian Mint and Defence Housing Australia – also to be placed on the block for sale in the first stage of privatisation:

The full restructuring plan, obtained by The Australian, is estimated to save $470 million over four years in a two-stage reform in tomorrow’s budget, to be followed by more cuts in a third stage at the end of this year.

…the federal bureau­cracy has swelled to almost 1000 entities, ranging from big agencies to obscure committees…

Selling Defence Housing Australia is tipped to raise $1 billion while the government will also launch studies into the sales of Australian Hearing and the Royal Australian Mint, worth hundreds of millions of dollars…

The Australian was told that the agenda could be expanded over time to include the Australian Rail Track Corporation — said to be worth $4bn — but that Australia Post was not on the list.

The AFR has put the figure of scrapped or merged agencies at 50, but also notes that 16,000 Commonwealth public service jobs are at risk; although 14,500 of these are already captured by the efficiency dividends Labor had already imposed across the public sector:

The government believes there are between 900 and 1000 government bodies but, a source said, no one knows the exact number. The situation is now “out of control’’, and was creating confusion and cost for the community.

As noted last week, there does indeed appear to be some scope to streamline operations and trim back office staff across the Commonwealth public service.

A quick glance at “Public administration and safety” employment in the ABS quarterly employment statistics – a proxy for the federal and state bureaucracies – shows that public sector employment levels have surged relative to population since the early 2000s, suggesting there is room to cut:

ScreenHunter_2229 May. 01 10.27

Moreover, this growth in public sector employment appears to have been led by the ACT, as illustrated in the next chart:
ScreenHunter_2230 May. 01 10.31
The ultimate test for the Abbott Government will be to ensure that the cuts do not impact adversely on front-line service delivery (e.g. nurses, teachers, social workers, etc), which is where pain will be felt most by the voting public.
Meanwhile, the Government has also flagged that it will cut some of the $10 billion of assistance provided to the private sector, so that business shares some of the burden of adjustment:
Joe Hockey told The Weekend Australian that his vow to end the “age of entitlement” meant asking business to give up some of the payments and services Canberra had been giving it for years…

“Those who depend heavily on government support will not necessarily receive the same support into the future,” he said. “Business has a responsibility to manage itself in the same way that we expect (others to do so), other than those most vulnerable in the community.”

Government sources told The Weekend Australian that agencies would be scaled down and fees ­applied to more services for business in a “cost-recovery” plan to cut expenses.

The savings in the budget amount to hundreds of millions of dollars as part of a longer-term plan to reduce the reliance on corporate welfare.

On the face of it, this seems like a good move by the Abbott Government, although the devil will obviously be in the details. It does, however, highlight the inherent inconsistency in granting millions of dollars of funding for Tasmanian firms Huon and Cadbury, along with the tens-of-billions of dollars earmarked for local defence manufacturing, when high quality imports are available at a fraction of the cost.

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Comments

  1. Stephen Morris

    “Those who depend heavily on government support will not necessarily receive the same support into the future.”

    Ha!!!

    You can bet your bottom dollar that won’t include Joe Hockey’s mates in the (government-mandated) superannuation funds management sector.

    The $18+ billion p.a. flow of fees to fund managers will continue . . . and grow.

    Not to mention the needless fees paid to private infrastructure financiers. And not to mention the avalanche of rents that will go to newly created private monopolies and tax farms.

    Government support of Mates in the private sector is not coming to an end.

    It’s just a different set of Mates!

      • Same result.
        Assets handed to “investors”.
        Just like South Africa after Aparteid.
        Just like Ukraine in the 90’s
        Our crisis is just a little more fake.

      • “Our crisis is just a little more fake.”

        Hmmm – crisis capitalism. What a “shock”.

      • If Labor had actually given us the land tax, opened up the land free from nimbys, ended or curbed NG, etc, you know, if they’d actually been properly left wing like they’re supposed to be, they would still be in.

      • drsmithyMEMBER

        If Labor had actually given us the land tax, opened up the land free from nimbys, ended or curbed NG, etc, you know, if they’d actually been properly left wing like they’re supposed to be, they would still be in.

        Still be in from when ? Labor haven’t been “properly left wing” for decades.

      • “If Labor had actually…”

        Any chance of you focusing on the parties that are in power nearly everywhere in Australia?

      • The Libs are the best of a bad bunch. I focus on a threat to that.

        Why don’t you lefties focus on making a sensible and credible alternative instead of just bashing the Libs all the time?

      • drsmithyMEMBER

        Why don’t you lefties focus on making a sensible and credible alternative instead of just bashing the Libs all the time?

        Now there’s some weapons-grade irony.

      • “Now there’s some weapons-grade irony.”

        Yet you lot are constantly accusing the right of parroting empty slogans.

    • Schadenfreude

      You can bet your bottom dollar that won’t include Joe Hockey’s mates in the (government-mandated) superannuation funds management sector. —– Government support of Mates in the private sector is not coming to an end.
      .
      .
      .

      Ahhhh, blessed are the cigar makers…

    • Don’t forget all those ex-pollies who still have their snouts in the trough. Who is going to sign them off with a “Dear John” letter !!!!!

  2. ”The government believes there are between 900 and 1000 government bodies but, a source said, no one knows the exact number. ”

    unbelievable

    at least we know where a lot of the money has gone

    borrowing at compound rates of interest to create entities that shuffle paper

    unbelievable

  3. $100 million pa, 1000 agencies…$100,000 per agency…some of them must be very very small…perhaps there should be a cost-benefit analysis done before they’re junked.

  4. The Public Sector reminds me of my times with Japanese Trading Companies like Itochu etc. Would create Companies aplenty and have their finger in every pie even though most would be loss making just to be in the field.

    It would be good to see that Public Service % back around 2.5% of population. I’ll bet much of the additional is just wasted layers of nonsense or quasi agencies created just to create a job rather than answer a need.

    • casewithscience

      Great – organising 1/3 of the countries expenditure through 2.5% of the population. Good luck getting decent decisions made (or administrative decisions made at all).

      The “small government is good government” argument is flawed. Private business simply does not deal in many of the areas that government cover. Parliament often extends laws requiring regulation of activity which needs to be decided on through government. To take a simple example, Parliament has determined that if I want to put a bore into my backyard to get water, then I need a permit. Someone has to assess and provide the permit, being a government agency. There are thousands of people looking for permits, so I am in a queue. Because of reduction of public servants, I won’t get my permit for years (decades with the latest round of public service cuts) which holds me up from reaping the economic benefit of having a bore. Private industry can’t approve the bore, there is no profit motive and only potential corruption if we go down that route.

      Simple fact is that effective and resourced government agencies are necessary to have economic development. The alternative is the scrapping on any law relating to the quality and consistency of use of resources mandatorily requiring administrative approval by government. Good luck getting that past the greens/Labor.

      • Get, that scrapping sounds like a really good idea. Lets get rid of stupid laws that take an army of bureaucrats to administer!

      • casewithscience

        @Peachy

        No problems – but expect no central control of the economy and an expansion of the realm of economic and environmental losers as a result.

      • I think you should better start with the obvious question why does anyone need to asses and issue a permit for a stupid bore. In Eu you just have the bore done. The company that does it for you has all the hydrological information for that area and on completion takes a sample of water to an independent lab to be assessed and you are done. Now if you guys go for a permit for everything under the sun what do you expect.

      • casewithscience

        @vonZetty

        As you will appreciate, my actions will have an affect on the surrounding water table. Without some central management, it is every man for himself and the water table will be irrevocably damaged. I could send my neighbours broke by taking all the water myself, let alone the damage to the environment. Hence, Parliament has passed laws requiring some central decisions on assessment.

        What point is the rule of law if you have no laws?

      • Case…. I was talking about a bore you take water out of for things like drink, brush your teeth, cook, wash with. I didn’t have in mind thousands of kiloliters per hours or hectares of irrigation. If you have in mind industrial consumption then yes you need an assessment. If is household usage you shouldn’t. Now if you talk about you sending the neighbors broke because you are using all the water it means you really have in mind industrial consumption. But then again you are saying “there are thousand people looking for permits”. Are all those permits seekers having in mind that level of usage? And something else as you may not know how this works. A small diameter bore you may be limited by a “no permit needed” clause will act as a automatic regulator of the quantity you can take out in a 24 hours interval. Depending on the strata geology, volume of aquifer pressure etc the max volume may be just a few hundred litters. No danger of driving your neighbors broke. If your bore does that it would have happened anyway in a few months.

      • Permits for domestic bore? Why bother ? I drilled a bore with a manual post hole borer to 18m. You can drill deeper if the misus gives a hand hauling up the pipes via the home made derrick.

  5. LabrynthMEMBER

    I heard over the radio on the weekend a statistic stating that over 50% of the population take out more than they put into the tax system.

    Does anyone know if this statistic is real? if so where is the source.

    • “I heard over the radio on the weekend a statistic stating that over 50% of the population take out more than they put into the tax system. ”

      I don’t think that’s quite the case – I think it’s income tax rather than the total tax system and it’s “family units”, not individuals.

      “Does anyone know if this statistic is real? if so where is the source.”

      http://www.news.com.au/finance/money/half-of-families-pay-no-net-tax-if-welfare-benefits-deducted-new-figures-reveal/story-e6frfmci-1226910739573

      HALF of Australian families receive more in welfare than they pay in income tax, new figures reveal.

      As the Abbott government sharpens its budget razor on welfare, the figures reveal just how dependent we’ve become.

      The exclusive modelling for News Corp Australia by the National Centre for Social and Economic Modelling at the University of Canberra reveals 48 per cent of Australia’s 12.2 million “income units” pay no net tax. Any tax they do contribute is more than offset by the welfare — pensions, family tax benefits or childcare rebates — they receive.

      Edit: And something to keep in mind…

      ““I guess you have got to keep in mind that about 3.2 million of these 12.2 million families are not of working age, they’re either very young students or the vast majority would be aged pensioners and self-funded retirees — both those groups don’t pay tax,” Mr Phillips said.”

      • And something else to keep in mind…

        “The figures include welfare paid in pensions, family benefits, jobless support and childcare support. They include all income taxes paid, BUT NOT indirect taxes, like cigarette excise and state-levied taxes such as the GST.”

        (Emphasis mine)

  6. drsmithyMEMBER

    Given the flat-out lies already peddled (eg: 11 GP visits per person to justify starting to dismantle medicare), one might want to take some of those numbers being thrown around with a grain of salt.

    This Government is ideologically opposed to publicly funded services, and will say whatever they can think of to justify their removal.

  7. Didn’t the public service grow by about 200k people under Rudd/Gillard?

    If Labor has their way we’ll grow the debt to about 1-2 trillion and have next to nothing to show for it.

    You have to lie to a people when 50 odd percent of the people are all but communist these days and just want to rack up the credit card and hand the debt to gen x and y and a bunch of kids who are about 10 years old now.

    • “You have to lie to a people when 50 odd percent of the people are all but communist these days ”

      Yeah – I guess you’d know about lying.

    • Didn’t the public service grow by about 200k people under Rudd/Gillard?

      FFS Bluebird, look at the 3d1king chart! Most of the growth in the public service happened between 1998 and 2007. i.e. Under Howard.

      • intertubernet

        It never ceases to amaze me that partisans still exist. Doesn’t everyone know both sides are corrupt and incompetent yet? Both sometimes get it right too (by luck, I imagine).

        Time to stop flipping the coin and change the game.

        Obviously not directed at you, Lorax…

      • “Doesn’t everyone know both sides are corrupt and incompetent yet? ”

        I’m with you on that one…

  8. I see the Australian Renewable Energy Agency is going.

    Who needs that “utterly offensive” crap when we’ve got so much 3d1king coal to burn!

    • intertubernet

      We need more drones! Thousands of wonderful Aussie built drones to patrol our skies and coastline.

      • Schadenfreude

        Our Playstation generation could fly them for next to nothing!

        Just pay them in Twisty’s and Coke.

  9. Besides blind mindless ideology, why would any sane government sell the mint? It has a perpetual monopoly to literally create money and sell it at enormous mark-up.

    All selling it would do is give the seigniorage to the private sector forever. Since it’s a natural monopoly (competition doesn’t even make sense for currency issue) then the private sector is guaranteed to run it worse than the government (those who say government is inefficient have never experienced a real private monopoly; they’re far worse). It would also tie the government’s hands in relation to controlling the currency, as critical private intermediaries would now be involved. Imagine if the same company that bought the mint also bought the company that provided the blanks, for example.

    A study would hardly be required to realise that this particular proposal is utter madness.

    • intertubernet

      Natural monopolies belong in government hands.

      If you don’t understand that you shouldn’t be allowed outside, let alone near the government of a capitalist democracy.

  10. And how many of the “pork plans” of Abbott and his buddies are on the chopping block ?