Young Aussies bear brunt of deep public sector cuts

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By Leith van Onselen

History never repeats but it sure does rhyme.

Upon being elected in March 1996, the Howard Government commenced a program of cutting spending and jobs across public sector agencies, only to then hire an army of consultants and contractors.

The grand irony from the Howard Government experience was that many of the contractors were the same former public servants that had received generous redundancy payouts and then were paid much more to do effectively the same job.

It was nice work if you could get it, but a disaster for taxpayers.

A similar process has played out since the Coalition was elected in 2013. Former Prime Minister Tony Abbott pledged to slash 12,000 jobs from the Australian Public Service (APS), but as of January 2018, 14,000 jobs had been cut.

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In fact, over the weekend The Canberra Times reported that the APS lost another 1,368 jobs over the past year, shrinking to its smallest size in 12 years:

The Australian Public Service shed staff in most parts of the country, including Canberra, employing 150,594 people on June 30 this year.

The public sector union called the latest cuts a “neoliberal attack” and a “massive con”, saying the government was instead hiring private firms to do the work, which cost taxpayers more…

The APS now has about 4500 fewer staff than it did under John Howard’s prime ministership in 2007… In 2007, the APS had one employee for every 133 Australians. Today, it has one for every 165…

At the same time as APS numbers have been slashed, last year it was revealed that Australia’s top bureaucrats were awarded large pay rises and that public service wages are growing fastest at senior levels, whereas those at lower levels are experiencing record low wages growth.

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And while senior bureaucrats are making out like bandits, consultants are also cashing in, with billions in taxpayer funds flowing to consultancy firms, especially the Big Four accounting firms. Worse the Coalition recently implemented new bargaining rules for public servants, which capped rank-and-file pay growth at 2% while also protecting consultants’ lucrative contracts.

Another worrying trend is that the lion’s share of APS job cuts have taken place among younger cohorts – especially staff aged under-30 – whereas those aged over-50 have seen their share of APS employment rise inexorably:

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The problem of slashing the public service and replacing them with private sector consultants runs deeper than merely replacing one set of workers with a more expensive set of workers. It also reflects the broader loss of independence and the politicisation of the public service, whereby governments of both persuasions are now too willing to outsource policy development to consultants or (erroneously named) think tanks.

Add in the seemingly unbridled growth in the number of staffers and advisors in ministers’ offices, and the role of departments in policy formulation and advice has been badly diminished and politicised.

The end result is that “frank and fearless advice” is gone, replaced by spin and compromised analysis designed to support a pre-conceived political agenda.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.