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Federal budget 2017: private sector hit as Defence boosts staff numbers

The Defence Department will grow its staff numbers by 850 public servants as it pulls funding from Canberra's lucrative private consultant and contractor market.

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Defence's staffing levels will climb again after years of decline, growing by 620 to 17,970 in 2017-18 and stabilising from the next year at 18,200.

The growth will include more public service jobs in its intelligence, space and cyber security ranks as the department meets priorities set out in the 2016 Defence white paper, but these will be offset by cuts elsewhere in its APS workforce.

A rise in the department's overall public servant head count will come as it cuts $304.1 million of spending over the next four years largely by reducing its use of contractors and consultants, and clamping down on travel costs.

The decision will hit the ACT's defence contractor market that has benefited from growing department spending on its services in recent years.

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Defence's budget will grow to two per cent of GDP by 2020-21, three years earlier than the Coalition originally planned.

The department will tighten its travel spending for public servants as it limits costs of non-operational overseas and business trips.

It has cut its workforce by 5000 since 2012 but has engaged more consultants, many formerly employed in its ranks of public servants.

Defence will slash $70 million of spending on contractors and travel costs in 2017-2018, and cuts will steadily increase to $85.7 million in 2020-21.

The department, which has a contractor workforce of 2087, earlier this year decided to target those on its books masquerading as "service providers".

In budget papers released on Tuesday, Defence could not number its service provider workforce, saying it was employed by third party organisations with no obligation to report staff numbers to the department.

As it takes the razor to private sector spending, Defence will also grow its military ranks by 472 to 59,194 in 2017-18, while its force of reservists will also swell by 300 to 19,700, bringing the department's total staffing growth to 1300 that year.

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