Public service may not be cut so deeply

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Should we pity public servants in the wake of the election? I'd hold off on sympathy for now; it's too early to say what's about to happen to Canberra.

I'm inclined instead to pity a few of Tony Abbott's soon-to-be ministers. Because, if all goes to the apparent plan, at least a few of them will be forced to give up the power they just spent six years fighting for.

Let me explain. The Coalition says it will rely on attrition to cut 12,000 Australian Public Service jobs between now and September 2015.

It won't because it can't. It might have been possible in a ''business as usual'' environment but that won't describe the skint bureaucracy over the coming two years.

You see, from July next year, the Coalition will also impose Labor's 2.25 per cent ''efficiency dividend'' on the public service, as well as its extra 0.25 per cent dividend, as well as all the other cumulative savings Labor committed to in previous budgets (such as hundreds of millions of dollars of cuts to travel, printing, advertising and so on).

These cuts alone will force agencies to shed thousands of staff. But the Coalition has made it clear it won't ''double count''; these job losses must be in addition to the 12,000 from the hiring freeze.


Then, on top of this, the Abbott government will remove funding for other parts of the public service, such as for staff who work on climate change, the mining tax and so on.

And, finally, to ensure its target is impossible to achieve, the Coalition says it won't get rid of ''frontline'' staff (whoever they are) and it will boost military spending, which will see the Defence Department expand rather than shrink.

What will public servants do during an economy drive? They won't quit their jobs; fearful for their future, they'll stay put.

Public Service Commission data from the Howard government's first term shows this clearly.

After John Howard begun his cull in 1996, the bureaucracy's resignation rate dropped about 11 per cent and the retirement rate collapsed more than 60 per cent. And that was without a hiring freeze. Managers even seemed more reluctant to sack public servants: dismissals were down more than 80 per cent.

It makes sense: why leave a job when, if you hold on, you know you'll at least get a payout?

A little dissembling would be far easier than the alternative: asking a cabinet of ambitious ministers to downsize their own jobs.

So Abbott can't rely on a recruitment freeze to achieve his austerity goals, because the public service's attrition rate is about to plummet, especially in this city.

Instead, he'll have two choices. He could retrench staff, a costly option that would see the promised savings evaporate.

Or he could back some of his and his frontbenchers' anti-federal rhetoric by handing over powers to the states and territories.

But is that likely? Seventeen years ago, Howard did what Abbott is about to do: he established a commission of audit to scrutinise government spending.

The prime focus of that commission, led by Professor Bob Officer, was on whether the Commonwealth did too much. ''Are particular activities best handled by government? If so, by which level of government?'' it asked.

It went on to advise the federal government  to transfer many of its health, education and family-services functions to the states, saying there was:

  • ''an increasingly blurred allocation of roles and responsibilities between levels of government'';
  • ''duplication and overlap of administration'';
  • ''higher costs because of lengthy consultations/negotiations and reporting between levels of government'';
  • ''avenues for cost-shifting between levels of government''.

If that sounds familiar, it's because Abbott and his finance spokesman, Andrew Robb, have been channelling the same message from opposition. As Abbott put it last year, his commission of audit will examine ''whether the federal Health Department really needs all 6000 of its current staff when the Commonwealth doesn't actually run a single hospital or nursing home, dispense a single prescription or provide a single medical service; whether the federal Education Department really needs all 5000 of its current staff when the Commonwealth doesn't run a single school'', and so on.

In the coming months, Abbott's commission will no doubt echo Officer's findings from the 1990s; it will advise the federal government to withdraw from a range of activities.

The question will be whether Abbott and his cabinet have the stomach for it.

Howard didn't. Sure, he retrenched tens of thousands of staff, but he couldn't bring himself to also let go of the power. Instead, the Howard government became the most centrist in living memory – and, within a handful of years, had re-employed all the staff it paid to leave and some more besides.

Abbott will face the same challenge: having won office, is he really prepared to say ''let's leave governing to the states''? That's hardly the approach he took when he was health minister. Nor are his new ministers for health, education, environment, agriculture et al likely to willingly become ''ministers for yielding power''. Yet that's the only way Abbott will achieve significant structural savings in the federal bureaucracy.

Perhaps, just quietly, in a few years' time, voters will have forgotten the government's pledge to shed 12,000 staff. Or perhaps it can measure the job ''losses'' in an easier way: for example, by claiming all the jobs gone since a year ago, when the bureaucracy first began to shrink.

A little dissembling would be far easier than the alternative: asking a cabinet of ambitious ministers to downsize their own jobs.