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More public service cuts to offset Liberal campaign promises

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Public service bosses will be charged with finding many of the savings needed to fund the Liberal Party’s election promises, with the Opposition vowing to impose a new “efficiency dividend” across all departments – but how they meet it will be “essentially up to them”.

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Shadow Treasurer Rob Lucas insisted “frontline services” would be quarantined from any cuts but conceded there would likely be a “reduction of administrative and back-office functions” to offset new spending commitments under a prospective Liberal administration.

However, he denied the dividend would necessarily involve job cuts, saying: “I wouldn’t accept the notion this automatically means reducing the size of the public sector.”

The major parties traditionally leave detail about their election policy costings until the eleventh hour of the campaign, but the Liberals this week revealed they would save $20 million over four years by cutting 50 ministerial staff.

Much of this would in effect be realised by the termination of back-fill contracts, with current departmental ministerial liaison officers returned to their original roles within the bureaucracy.

Lucas also alluded to a broader “efficiency dividend” – the same mechanism used by Treasurer Tom Koutsantonis in December’s mid-year budget review when he sought to claw back $370 million in revenue lost by the defeat of his bank tax through public sector cuts.

The budget update drew fire for outsourcing the specifics of the cuts to public service chiefs.

“That’s the best way to do it, otherwise you’ve got politicians deciding,” Koutsantonis said at the time.

“What you’re better off doing is saying to chief executive officers of agencies ‘you know your budgets better than anyone else, you know how best to deliver efficiencies’.”

Lucas said today: “Labor and Liberal are exactly the same in relation to this – we’ll be seeking to protect frontline services and reducing administrative and back office functions.”

He would not reveal the extent of the dividend but suggested it would account for a significant proportion of the Liberals’ pre-election costings.

“The broader categories, essentially, in the end, will be something similar to what Tom Koutsantonis announced in the December mid-year budget review – an efficiency dividend, which will require departments to produce savings,” he said.

“How they achieve the savings is essentially up to them.”

Lucas insisted there would be specific savings measures identified, citing the Opposition’s pledge to discontinue an Aboriginal treaty process, which would save “four or five million dollars”.

“We’ll have a range of things, we’ll announce a number of specific programs which we’ll say we won’t continue to fund [but] an important element will be a savings task for an efficiency dividend, which ministers and departments will have to find.”

Election costings have been the Liberals’ Achilles heel in successive campaigns: in 2006 – with Lucas again as Shadow Treasurer – a bid to slash public service numbers drew fire from the public sector union, while vague accounting in Steven Griffiths’ 2010 balance sheet was seen as a turning point in the campaign.

But Lucas suggested the Opposition should not be held to the same standard of accountability as governments.

“Koutsantonis, of course, has all the advantages of being in Government, with 100 people to answer his questions… we’re not quite in that position in terms of providing detail, so whether you want to apply the same rule to Opposition as Government is a judgement call for you,” he said.

“But we’re not in the same position.”

He said the Liberals would not be identifying a “hard target” for public sector job numbers this time around, as “Labor don’t have a hard job cut number” either.

“We’ll leave it up to departments to organise, but we won’t just be leaving it up to CEOs – we think this will be a responsibility for ministers and CEOs working collaboratively together,” he said.

But he acknowledged there would need to be additional savings over and above those identified in the mid-year budget review.

The Liberals have already made a raft of new spending commitments, as well as pledging payroll tax cuts and a restoration of the scrapped Emergency Services Levy remission.

But Lucas argues Labor will similarly have to justify how it funds any new spending commitments, saying: “Once we get into the election proper, they will make a range of commitments which then have to be funded, so they’ll be in the same position.”

“They’ve set an efficiency dividend – we’ll be setting an efficiency dividend.”

He acknowledged the public sector may be “sceptical” about an incoming Liberal Government but said there was equal scepticism about Labor’s record.

“The public sector is obviously interested in numbers and services, but also what they’ve seen as the appalling politicisation of the public sector [so] there will be a range of issues that the public sector will be looking at, I’m sure,” he said.

Koutsantonis would not rule in or out increasing his own public sector cuts target, telling InDaily: “We’ll be making an announcement once we’ve completed most of the policies about the costs of them, and how we intend to pay for them.”

But, he insisted, “anything that’s announced above the mid-year budget review cuts into public sector numbers.”

“Ultimately we think the public service is very efficient as it is – we think public servants aren’t just things to be cut for the sake of trying to make your policies fit.”

When asked if that was exactly what he was doing with his own budget update, the Treasurer said: “We aren’t sacking people, we’re just not recruiting against attrition in some cases.”

He said as it stood the funding the Liberals’ agenda would “push the state into deficit” and any further efficiency dividend would eat into public sector jobs.

“The public service can make these decisions, but ultimately you get to a point where you’re left with only one option,” he said.

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