Labor would scrap a remaining additional efficiency dividend to be imposed on federal agencies, grow staffing at the department overseeing Centrelink, and cut government travel spending if it won the next election, its finance spokesman has vowed.
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In a speech on Thursday about the state of the public service, Jim Chalmers announced his party in government would begin reforming the bureaucracy by forgoing revenue from a remaining 0.5 per cent additional efficiency dividend next year, finding the funds instead by cutting spending on private contractors and travel.
Dr Chalmers said Labor would not reverse previous efficiency dividends, and a base efficiency dividend imposed by the Hawke government would remain.
He said the efficiency dividend, an annual funding reduction for Australian government agencies, had kept costs in check since it was first applied in 1987, but regular additional dividends had become a blunt instrument compromising the public service’s ability to meet expectations.
Labor would save about 550 jobs under its plan to forgo the 0.5 per cent additional cut, Dr Chalmers said.
"While the additional efficiency dividend may have served a purpose in the past, it’s now had its day," he said.
Dr Chalmers warned of a climbing government spend on travel, vowing to cut it by 10 per cent and calling for agencies to use more video conferencing where appropriate, considering they had felt the pinch elsewhere.
Government departments paid $593 million for flights, accommodation and hire cars in 2017, keeping an upward trajectory for the federal travel spend since the Coalition came into office. The federal government says its air travel spend in real terms is around the same level as Labor’s last year in government and well down from a decade ago.
Coupled with a promise to cut "wasteful" spending on contractors, Dr Chalmers said Labor would invest the savings back into the public service and provide figures closer to the election.
Labor would also create 1200 new full-time, permanent jobs at the Department of Human Services in government, following cuts to thousands of staff under the Coalition blamed for falling service standards at Centrelink.
Dr Chalmers said the public service had lost corporate knowledge as lessons learnt in outsourced services went unshared with policy advisers.
"At a time when Australians expect more from government, we have seen the capability of the public service diminished, with the size of the public service as a proportion of the population falling by a quarter since 2007."
Finance Minister Mathias Cormann defended efficiency dividends, used by both Coalition and Labor governments, as a way of making sure government administration was efficient.
"Taxpayers are entitled to expect that taxpayers' money on government administration is used wisely, that the cost of government administration is as low as possible and that there is a consistent and ongoing focus on maximising administrative efficiency gains," he said.
He denied cuts to the public service and a growing use of contractors had diminished corporate memory, saying the Australian Public Service workforce was more experienced than ever, having a median length of service of 10.5 years.
The use of contractors where appropriate kept the overall cost of government administration low when an agency's need to access relevant skills, expertise or additional support was temporary, or these were more efficiently obtained and maintained in the private sector, Senator Cormann said.
The size of the public service ballooned under the previous Labor government and imposed excessive ongoing costs, he said.
Senator Cormann said the overall cost of the federal government’s administration as a proportion of its total expenditure - including spending on consultants and other contracts for goods and services supporting government administration - had fallen from 8.5 per cent in 2007-08 to 6.8 per cent in 2017-18 and was projected to continue to fall to 5.6 percent by 2021-22.
