The public service efficiency dividend will save the federal government an extra $63 million in capital expenditure, on top of $1.4 billion in savings on ongoing spending.
The government's mid-year budget update shows that tens of millions of dollars in capital investment will be saved as a result of the efficiency measure in the next four years, including an extra $5.1 million this financial year, $15.5 million in 2020-21, $21.3 million in 2021-22 and $21.6 million in 2022-23.
Under a timetable set out in the update, the efficiency dividend will remain at 2 per cent through to 2020-21 before stepping down to 1.5 per cent the following financial year and returning to the 1 per cent base rate from July 2022.
Treasury estimates this will deliver a saving of $130.1 million this financial year, increasing to $362.3 million in 2020-21, $481.3 million in 2021-22 and $467.7 million in 2022-23 - a total saving of $1.44 billion over the four years. Adding in savings on capital expenditure will lift overall savings from the measure to a little more than $1.5 billion.
The government said that only the National Disability Insurance Agency, the Australian Securities and Investments Commission, the Australian Prudential Regulation Authority, Prime Minister Scott Morrison's former employer Tourism Australia, collecting institutions like the National Gallery of Australia and the National Library of Australia and agencies with fewer than 200 employees were exempt from the efficiency measure.
The government also used the budget update to confirm that $15 million has been allocated over the next two years to drive its reforms to the public service - far short of the $100 million a year recommended by the Thodey review.
The government indicated that the Department of Prime Minister and Cabinet would receive an extra $3 million this financial year and a $6.6 million top up in 2020-21 to implement changes unveiled late last week. The Australian Public Service Commission will be given an extra $5.4 million over the two-year period.
"This funding represents an investment in the capacity of the APS to respond to challenges and opportunities and deliver better services for the Australian people," the government said.
Mr Morrison has said he wants to "bust bureaucratic congestion" and use technology and improved processes to ensure the seamless delivery of government services.
But the government has rejected many of the most far-reaching reforms proposed by the Thodey review, including removing the cap on public service staffing, moving to common set of pay scales and conditions, reducing political influence over the appointment and removal of department secretaries and establishing a code of conduct for ministerial advisers.
The Prime Minister has directed the secretaries board, comprising all department secretaries, the APS commissioner and the director-general, national intelligence, to kick-start the reform process. It has been given three months to develop a detailed implementation plan.
The board, supported from a small team within the Department of Prime Minister and Cabinet, is expected to develop a set of APS-wide performance targets in consultation with the government, aimed at driving long-term change in public service culture.
"The secretaries board will drive positive and long-term change of APS culture," the government said in its response to the Thodey review. "APS-wide culture change will focus on identifying and driving a small number of key behavioural shifts that will collectively lift APS performance and capability."
Part of the government's reform drive for the APS is to increase the use of data technology in the delivery of services.
To help achieve this, it has allocated an extra $25 million over two years, including $19.1 million for a protected utility platform and almost $6 million to support the development of the digital identity program, to allow users of government services to verify their identity online.