Defence Department secretary Dennis Richardson said he was seriously considering footing some or all of the $19 million a year paid parking bill for his staff which could lead to further cuts to civilian staff numbers.
On Tuesday Mr Richardson said paid parking costs not fully covered or partly subsidised would disproportionately hurt young staff as well as female workers who dropped their children off at school or childcare.
The high-ranking bureaucrat and a number of his executives will make a decision about who will pay the bill within three weeks.
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He told a Senate Budget Estimates hearing that paid parking would effectively reduce take-home pays by a minimum of 3 per cent of the 95 per cent of 6500 Defence staff in Canberra.
Almost half of Canberra-based Defence staff would have their pays reduced by at least 4 per cent and a quarter of staff would effectively have their pay trimmed by at least 5 per cent.
Mr Richardson noted Defence staff would be harder hit than public servants in other parts of the bureaucracy.
"If you're a public servant in the Department of Finance you earn up to $1500 to $20,000 a year more than the equivalent person in the Department of Defence, between APS 1 and EL 2 level," he said.
He said paid parking would also be a disincentive for staff, many of them in vital intelligence jobs, to move to Canberra.
Defence staff at most other locations worked on bases and did not need to pay to park.
Given the tight fiscal environment, Mr Richardson said "further reductions in the civilian workforce" or other savings measures would be needed if the department subsidised paid parking.
"I accept that (paid parking) is coming in, that decision has been made," Mr Richardson said of the decision that will affect parking on national land in the parliamentary triangle from September.
ACT Senator Zed Seselja, who has not supported paid parking in the parliamentary triangle, said he supported moves by the Defence Department, and any other federal government employers, aimed at alleviating the impact on employees.
The budget outlines almost 2300 job cuts to Defence over five years and Estimates hearings this week heard Defence could not guarantee intelligence personnel would not be culled from the workforce.
While the introduction to paid parking could hurt Defence's female workforce, there was also speculation job cuts could affect women in the department as well.
Canberra MP and the opposition's parliamentary secretary for defence, Gai Brodtmann, said she was concerned about the low ratio of women in Defence.
She said the cuts, along with the APS-wide hiring freeze, which had been in place since the Abbott government took power, would be detrimental to the effort to hire and retain women in Defence.
“In recent years, there has been a concerted effort to address this imbalance," Ms Brodtmann said.
"In 2011 the Labor government announced a review to improve pathways for women in the Australian Public Service within Defence.
"I am calling on the Abbott government to guarantee that initiatives in place to reduce the gender imbalance within department will not be affected by these cuts, and that the overall number of women in Defence will continue to increase.”