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Labor's public service job cuts could hamper Coalition's plan to slash

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Political recriminations are flying in the wake of the government's decision to dump its policy to save $5.2 billion by cutting 12,000 public service jobs by natural attrition.

The Coalition is using Finance Department advice to accuse Labor of hiding job cuts of 14,500 over the next four years caused by the ALP's efficiency dividends, and to justify apparently walking away from the policy.

Finance Minister Mathias Cormann said the public sector jobs policy would now be handed to the Coalition's commission of audit, which will report early next year.

Mr Cormann pledged his government would have more to say on public service jobs and redundancies in the mid-year economic outlook, due next month.

The Coalition was warned before taking government that it would take a ''very tight'' hiring freeze to achieve its 12,000 public service job cuts without mass redundancies.


The head of the Parliamentary Budget Office, which costed the then opposition's policies before the election, also told a Senate committee on Monday that his office predicted a slowdown in voluntary departures from the bureaucracy, making the target harder to achieve.

In a Senate estimates hearing on Monday, Finance Department secretary David Tune said the "raw" data underpinning the 14,500 number had been progressively placed on the public record as the decisions were made by Labor.

But the advice issued on Tuesday was provided to the Coalition government about two weeks after the election, the Finance boss confirmed.

Mr Tune also revealed the rate of "natural attrition" in the service had collapsed from 6.6 per cent in 2011-12 to 4.1 per cent, which would see 7137 public servants leave their jobs voluntarily in 2013-14.

Fairfax Media projected Labor's mass reduction in the size of the public service almost two years ago – a projection that was rejected by the ACT's federal Labor parliamentarians at the time.

Budget analysis in January last year predicted 14,000 jobs would go between 2012-13 and 2014-15 as Labor fought to find a budget surplus.

Providing the detail of his department's calculations, Mr Tune said on Tuesday that 826 jobs would be trimmed through "more efficient management structures".

"The second one is the efficiency dividend ... the assumption we have made in coming to the figure of 4808 from the impact of the additional efficiency dividend is 55 per cent of that would be to staff costs and 45 per cent to non-staff costs," the departmental secretary said.

Finance calculated from projected wage levels that another 8819 jobs would need to go, Mr Tune told the committee.

In a fiery exchange in the estimates hearing, Senator Cormann said the government was serving the "public interest" by handing its public sector jobs policy to the audit commission.

"The government made a judgment that it was in the public interest for people to understand why we had to reassess how to implement our policy of reducing the size of the public service through natural attrition," the minister said.

He accused Labor senator Penny Wong of not disclosing budget decisions when she was in government.

"Given the implications of the decisions you made in government, not disclosed, before the last election," Senator Cormann said.

Senator Wong shot back, accusing Senator Cormann and his colleagues of misleading the electorate and ditching an electorate promise.

"The Coalition is moving away from its commitment to the Australian people before the election, just as they said they would," Senator Wong.

"They can't get $5.2 billion through a staffing freeze, they're going to have to get it through some other mechanism and they are using inaccurate and misleading leaks to some people in the media to try to justify a breach of an election commitment."

Earlier, Senator Cormann said the 14,500 job cuts, which would mostly have come through voluntary redundancies, were not funded, and have might have blown department budgets.

"This is another hit to the budget bottom line," Senator Cormann told the ABC.

"Labor based its budget on an expectation of 14,500 cuts in the size of the public service without making any provision to fund the necessary redundancies.

"Only 800 redundancies were provided for."

The effect on the budget bottom line could be further compounded by the Coalition's decision to delay or adjust its own policy of 12,000 job cuts.

The ACT's Liberal senator, Zed Seselja, has decried Labor's cuts as damaging to the economy.

"Whilst running an entire campaign focussed on supposedly saving jobs, Labor was cutting jobs behind Canberrans' backs," he said.

"Not only did the former government lie about their job cuts, they irresponsibly also failed to ensure that departments could continue to meet their budgets."

The full extent of redundancies under Labor will likely be revealed in the annual State of the Service report, due for publication in December.

At the end of a late night Senate estimates session on Monday featuring the Australian Public Service Commission, Public Service Minister Eric Abetz hinted broadly at the figures contained in the upcoming report, which is a comprehensive annual snapshot of the public service and its year in review.

During Monday night's estimates session, Public Service Commissioner Stephen Sedgwick calmly batted away a number of questions from Senator Seselja about the number of voluntary redundancies since June 2012 and the contribution of budget decisions made by the previous Labor government.

"I don't have a comprehensive list; I'd have to take that on notice," Mr Sedgwick told Senator Seselja.

"There are a number, agencies need to live within their budgets and in order to live within their budgets there are times when they need to reduce staff and that's happened."

But as the session wrapped up, the commissioner conceded there had been a decline of "hundreds" in the number of public servants during the reporting period.

His minister was more explicit, telling the hearing the figure was more likely to run into the thousands.

"I think you'll find within that report that the number of redundancies will be potentially in the hundreds if not in the thousands," Senator Abetz said.