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Public service: The Australian Tax Office will be expected to lose the largest number of staff in 2014-15, with more than 2300 jobs set to be slashed. Photo: Louie Douvis

The federal bureaucracy is poised for its greatest loss of staff since the early years of the Howard government. However, the Abbott government's budget will hit the public service more softly than the Coalition's rhetoric had suggested, and its spending cuts are less harsh than those the previous Labor government had planned.

Civilian government agencies will shed 7336 full-time equivalent jobs over the coming year, offset by the recruitment of an extra 2744 military personnel.

Finance Minister Mathias Cormann and Public Service Minister Eric Abetz said the cuts would continue in later years and they expected the public service to shed about 16,500 jobs by July 2017.

''Around 14,500 of these reductions are the result of Labor's secret, unfunded, across-the-board cuts, which they initiated just before the last election,'' the ministers said.

A month before the 2013 election, the Rudd government revealed plans for deep spending cuts across the public service, via a higher ''efficiency dividend'' - a 2 per cent cut to agencies' administrative budgets.

The National Commission of Audit strongly criticised this dividend, describing it as ''a particularly blunt instrument to achieve budgetary savings''.

However, the government has increased the dividend to 2.25 per cent for the next three years.

Despite stepping up these across-the-board cuts, the Coalition can claim to be a tad less harsh than Labor: it has set aside an extra $144 million to pay staff wages next financial year compared with the amount in the Rudd government's last budget update.

The Tax Office will lose the largest number of staff in 2014-15: it is expected to shed more than 2300 full-time jobs.

Treasury, health, industry and foreign affairs agencies are expected to lose about 10 per cent of their workforces. However, the Department of Human Services, which includes Centrelink and Medicare, will gain staff in the coming year.