Keeper of the purse: Finance Minister Mathias Cormann.

Keeper of the purse: Finance Minister Mathias Cormann. Photo: Alex Ellinghausen

The federal budget appears to have a gaping hole: it has failed to set aside enough funds for what is likely to be a record public sector redundancy bill.

Despite outlining the most ambitious job-shedding program in 15 years, the Abbott government has assumed most staff will leave of their own accord without seeking a payout.

The funding shortfall will easily exceed half a billion dollars over three years if the costs incurred in recent years are any guide.

The budget papers show the government believes it will spend $273 million in 2013-14 on separation payments for staff - the highest sum ever spent in a year. This record redundancy bill coincides with a net loss of 2695 full-time civilian jobs and 85 military positions.

Yet while the government plans to shed more than three times as many civilian jobs in 2014-15 - 8200 full-time staff - it has only set aside $105 million for payouts.

Its forecast payments then fall to a relatively tiny $49 million by 2016-17, despite plans to shed another 5000 jobs that year.

The Coalition regularly attacked the former Labor government's failure to fund public service payouts.

Shortly after winning office last year, the Abbott government abandoned its pledge to shed 12,000 staff without resorting to retrenchments, blaming what it called Labor's "hidden job cuts and unfunded redundancies".

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Finance Minister Mathias Cormann and Public Service Minister Eric Abetz said this week they were managing "Labor's largely indiscriminate cuts in a more structured manner, including funding the resulting redundancy payments, to ensure that the operations of agencies is not compromised".

However, Labor's assistant economic spokesman, Andrew Leigh, said on Thursday it was "bizarre to think that the exit rate in the public service is going to slow".

"What this illustrates is that they [the government] have not thought through the implications of these public service job losses," Dr Leigh said.

"They're hoping to get by with a lower number of public servants per head of population than existed towards the end of the Howard government, but they'll quickly realise they can't do much without them and without the services and advice they provide."

When asked why estimated future spending on redundancies was so low, a Finance Department spokeswoman said that, for job losses in 2014-15, "in some cases agencies may meet these costs from within existing resources".

"The process for accessing funding from this pool for 2014-15 has not yet commenced and therefore funding is yet to be allocated or appropriated."

The federal bureaucracy's natural attrition rate - the proportion of staff who voluntarily leave their job each year - has collapsed recently, falling to 3.8 per cent from a high of 6.9 per cent in 2008.

Government denies funding shortfall

The Finance Minister said on Friday that any claim the government had inadequately funded redundancy payments was wrong.

"It is true that the previous government's purported savings measures prior to the 2013 election equated to a reduction of 14,500 public service positions and that Labor neither budgeted for nor announced these reductions," he said.

Mr Cormann said the Coalition's mid-year budget update for 2013-14, delivered in December last year, allocated enough money to deal with that year's shortfall.

However, he did not comment on the budget forecasts for later years.

"Government agencies have also made provision for voluntary redundancies within their own budgets," Mr Cormann said.

"The claim by Labor and reported by Fairfax that the budget does not include sufficient provision for redundancy payments is simply not correct.

"The measures for mergers and abolitions of agencies in the budget also include funding for redundancies. The government continues to fix the budget mess inherited from Labor in an orderly and methodical fashion."