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$600m ripped from PS budget

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A union warns the budget cuts in the Rudd government mini-budget will mean at least 5000 jobs will go.

The public service is expected to rip out $600 million a year from its budget for three years without forced redundancies, according to the federal government.

Community and Public Sector Union secretary Nadine Flood said the cuts would mean even more pressure on public service that were already suffering from previous cuts.

"There are no easy savings left," she said.

"It will absioultely come to job cuts. We think 5000 is a conservative figure and that is based on agencies doing a good job [finding other savings]."


The union has also suspended all federal election campaigning at least until its executive can discuss the cuts at a Monday meeting.

“Years of cuts like this have done major damage to services and lead to massive backlogs such as 425,000 unprocessed Centrelink debts. The Department of Human Services has lost close to 4000 jobs since 2011 while the demand for services has increased. For the Government to claim these cuts will improve services and productivity is frankly insulting to staff," she said.

“We are calling on the Government to reconsider this awful decision.

“What politicians forget is that public sector workers are real people with families, mortgages and bills. If any other industry announced it was cutting thousands of jobs there would be a national outcry. Yet our politicians seem to be engaged in a perverse bidding war to see who can cut the deepest."

The Labor government is imposing the cuts in the form of a dramatically increased public service efficiency dividend that will jump from 1.25 per cent to 2.25 per cent from July 2014.

The "temporary" three-year increase to the dividend was announced on Friday as the government grapples with a $33 billion drop in projected revenue for the next four years.

Finance Minister Penny Wong said she expected an extra $1.8 billion in savings from the increased dividend.

"The Government has also identified $1.8 billion in saving over three years by increasing temporarily the efficiency dividend on the public service from 1.25 per cent to 2.25 per cent for the period of 2014 to 15, to 2016-2017 inclusive," the minister said.

"The advice from the Department of Finance is that agencies can absorb the temporary increase in efficiency dividend through a combination of non-staff cost savings, natural attrition and voluntary redundancies.

"The government continues to make it clear that it expects agencies not to resort to rounds of forced redundancies in order to meet these targets."

In Canberra on Friday, new Treasurer Chris Bowen said that Australia's economy was not undergoing a "crisis" but it was experiencing a "transition".

Mr Bowen said that because global growth was down it was having an impact on Australia's economy.

He said Australia's nominal GDP growth has fallen from 5 per cent in May to 3.75 per cent in the update.

The 84-page document handed down by Mr Bowen and Finance Minister Penny Wong outlines hits to the public service as well as delaying the growth of overseas aid.

Mr Bowen said that the economic plan outlined on Friday would be the plan that Labor would take to the election.There will be another update on the nation's finances during the election campaign, when the Pre-Election Economic and Fiscal Outlook is released by Finance and the Treasury within the first ten days of the campaign.

According to Mr Bowen and Senator Wong, Australia's economic fundamentals remain strong but there have been significant downgrades in tax revenues since the May budget that was handed down by former treasurer Wayne Swan.

Mr Bowen said that the decision to bring down a deficit of $4.7 billion in 2015-16 instead of a balance was an ''explicit'' decision to ensure that growth continued.

He said other decisions in the statement had been ''difficult'', referring to the cigarette tax hike and the larger efficiency dividend in the public services.