Liberals say a cut to contractor spend is a $2.1 billion cut to public service spending

Liberal senator Zed Seselja has warned that Labor's plans for the public service amount to a $2.1 billion funding cut, after the opposition promised to roll back spending on consultants.

Labor released its plan for the public service on Friday, including measures to remove the staffing level cap, add 1200 Human Services staff and overhaul the government's workplace bargaining policy.

Senator Zed Seselja has taken aim at Labor's plans for the public service. Picture: Elesa Kurtz

Senator Zed Seselja has taken aim at Labor's plans for the public service. Picture: Elesa Kurtz

The party said this wouldn't lead to a spending blowout, banking $2.6 billion in savings over the next four years by reducing spending on consultants, contractors and travel. At the same time, it promised to forgo the 0.5 per cent efficiency dividend for next financial year, at a cost of $522 million over the forward estimates.

The Liberal figure doesn't include $337 million in extra spending on the new Department of Human Services staff, because it is unclear whether the saving in contractors includes cancelling current call centre contracts.

The government has committed to spending $425.3 million until October 2020 on external call centre contractors for Human Services.

Senator Seselja says the savings measure is effectively an overall reduction in departmental spending, or a 2.5 per cent efficiency dividend.

"Government contractors provide a valuable service, no doubt about it. We've always had a mix when it comes to the delivery of Commonwealth services and advice and the private sector plays a role in that," Senator Seselja said.

"The CPSU [Community and Public Sector Union] might suggest it has no value but it's simply not true."

"It's $2.1 billion less over the next few years and obviously contractors will bear the brunt of that," Senator Seselja said.

The main public sector union argues public servants can do the same work that is now done by contractors, but at a lower cost, but Senator Seselja said the numbers released by Labor don't show more spending on public servants.

"It's not in their costings to have additional money as I understand it, for staff. So given they haven't done that that means their costings are completely wrong or they won't be replacing those contractors with public servants."

Senator Seselja said the move would remove the ability for public service bosses to make their own decisions about how they allocate funds in their budgets.

Senator Seselja also questioned the ACT Labor government's claim that a federal Labor government would be better for the territory, saying "it almost looks like a back of the envelope political attack".

Senator Seselja disputed the figures, saying Labor's major tax changes would cost $90 million a year to Canberrans.

"It was a pretty blatant politicisation of Treasury by Andrew Barr, but it really doesn't surprise me," he said.