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$600m ripped from PS budget


Noel Towell and Judith Ireland

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'Not a crisis, but a transition'

Treasurer Chris Bowen outlines the current state of the government's books and the Treasury's assessment of the declining economy, as well as Labor's proposed savings measures.

PT0M0S 620 349

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.

Treasurer Chris Bowen and Finance Minister Senator Penny Wong outline the government's mini-budget.

Treasurer Chris Bowen and Finance Minister Senator Penny Wong outline the government's mini-budget. Photo: Alex Ellinghausen

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.

22 comments so far

  • Is there an end to this game of cuts, cuts & cuts with promises of surplus, surplus and more 'delayed' surplus. Why not tell everyone the truth, or it the truth might be too painful or consequential for labor?

    Date and time
    August 02, 2013, 3:11PM
    • That's about the equivalent of 5,000 jobs.

      Date and time
      August 02, 2013, 3:31PM
      • Labor has to go.

        Date and time
        August 02, 2013, 5:00PM
      • Oh yeah Sharron, because the Coalition will be so much better for the APS....

        That Guy
        Date and time
        August 03, 2013, 9:20AM
    • ''Rip out'' Sometimes I wonder what they teach at journalist school

      Date and time
      August 02, 2013, 3:58PM
      • here we go again savings by increased efficiencies? Labor is good om promises terrible on returns. What did we get for the $33billion no roads no infrastructure only debt the only way this government will balance the Budget is by more taxes and there is only so much you can get out of Cigaretts etc Time to go labor I am sorry as I voted for Kevin 07 but we now have some track history on him and he will never change

        Date and time
        August 02, 2013, 4:20PM
        • The only problem with absorbing these 'temporary' increases in the efficiency dividend (which sound better to the public than 'budget cuts') is that the government, ministers and department heads still expect work to be turned around in the same time frames. There will be 'natural attrition' losses of staff, there will be cutbacks in IT spending (leaving the PS with antiquated, slow and inefficient systems). I don't have a problem with cut backs (cal;ling them what they are), as long as our bosses (at all levels) don't expect a continuing level of internal service - and, most importantly, the level of service to the public should not suffer.

          Date and time
          August 02, 2013, 4:28PM
          • Isn't it important for the level of service to the public suffer, with continual cutbacks and job cuts?

            Without people getting the hump in earnest at every level of their service from the APS the never ending mantra from the media of APS job cuts good, APS job cuts good, APS job cuts good will never end.......

            Date and time
            August 02, 2013, 11:25PM
        • there is plenty to rip out of public service without impacting upon delivery. Small agencies share, hr, finance, it, corporate services. only buy 1/2 of the printers, fix ratio of el2 to el1 to APSx staff. (big cull of el2 and el1), take more IT, HR etc of some of the other agencies and give it to a big place to run. Reduce the number of branches (and thus SES). I think they should not delay the increase to efficiency dividend but bring it forward to now.

          Date and time
          August 02, 2013, 4:42PM
          • You know I thought the business of government was to make our life better, make things easier and incomes the AL P with $190 Billion spent on nothing, $ 300 billion debt, increasing taxes increasing unemployment , then they blamed the high dollar, now they are blaming the low dollar. Labor has shown once more what economic vandals they are, when is this bloody election ????

            Martin Says
            Date and time
            August 02, 2013, 4:59PM

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