Burgess: have public service cuts given us small government?


As the federal budget approaches, how many public servants does it take to run the Commonwealth government? It depends on whom you count and how you count them.

Hands up those whose remember back a whole three years to the Abbott 2014-15 ‘horror’ budget that spruiked “a smaller public service and smaller government” and a net cut of 16,500 employees (about 6.5%) by 2016-17.

The Coalition was impassioned by the fashionable ideology of small government. It wanted to reduce civilian numbers to the halcyon days of 2006-07 — the last full year of the Howard government — and have “a sustainable public service that delivers better value for money for taxpayers”.

In three weeks’ time the second Turnbull budget will forecast the average staffing levels of each federal agency for 2017-18, based on the usual estimated full-time formula.

Back in the Howard dreamtime of 2006-07 (ancient history to the paleo pear brigade) the total was 238,622 ­– that is, 167,596 civilian and 71,026 Australian Defence Force and reserves. By comparison, in 2012-13, the last full year of the Rudd-Gillard governments, there were  256,632 (179,953 civilians and 76,678 military).

Last year’s budget predicted that by June this year the “general government sector” would comprise 245,474 — including 167,155 civilians (so 441 fewer than 2006-07, bang on target) and 78,319 military (7293 more).

But the departures of real civilian staff far outstrip the Coalition’s eventual 10,103 net average staffing level reduction since June 2014. The Australian Public Service Commission’s headcount shows that 31,736 Public Service Act employees “separated” from their “ongoing” jobs in the three years to June 30, 2016. With ongoing numbers down to 137,848, that’s a big chunk of corporate knowledge.

“The number of service providers plus contractors and consultants would outnumber public servants.”

The government also underestimated the cost of separations and redundancies. It eventually spent $255 million in 2014-15; $168 million in 2015-16 and estimated another $51 million this year — so $474 million just on getting rid of public servants including, inevitably, some of the best.

Difficulties have been compounded by the agency-bargaining lemon, a glaring absence of coherent social policy and a high turnover of mandarins, not least three secretaries of the Department of the Prime Minister and Cabinet, three of Finance and two of Treasury.

Last year’s first Turnbull budget edged away from the small government ideology but continued spruiking affordable staffing levels, modernising government and having a “smart, agile and responsive public service.”

Ah yes, just like the Census fail, the VET Fee Help scandal and most significantly the robodebt disaster that has brought complainant-shaming to a whole new level and, thanks to the Department of Human Services’ mishandling, has blown any trust that we, the people, might have had in the government to protect our personal information.

The 2017-18 budget will also predict what the government will pay its staff. Last year it said wages and salaries would cost $20.071 billion this year (not including superannuation).

Who counts?

The Australian Bureau of Statistics also reports broadly on the size of the public sector workforce. It says Australia had 1,924,800 public sector employees in June 2016 (about 16.4% of the national workforce): 243,300 in Commonwealth government entities, 1,495,100 in state and territory governments and 186,500 in local government.

The ABS said that in 2015-16, total cash wages and salaries for the public sector were $146.831 billion. Of that, $21.011 billion went to Commonwealth employees, $113.803 billion to state and $12.016 billion to local government employees.

So about 14.3% of Australian public sector cash wages and salaries went to federal employees, who comprised about 12.6% of Australian public sector workers and around 2% of the total workforce.

There are other ways to skin the cat, one of which is to measure the size of government according to government spending as a percentage of GDP. This takes the ‘big-versus-small’ debate into a different arena but, estimated at 26.2% in 2016-17, Australia ranks nowhere near the top.

And none of this gets near to counting what might be termed the ‘shadow’ workforce that serves the government but is technically employed outside it.

Defence secretary Dennis Richardson, who announced his retirement yesterday, belled the cat on a tiny portion of that shadow workforce in February when he blasted some of his senior managers for doubling to 700 the number of individual contractors they hired during the year (Defence reports on these numbers every year).

Some dismissed this as a piece of theatre to underline the massive four-year program of Defence staff cuts — civilians have dropped from 22,300 to 17,300, with a ceiling of 18,200 to be filled as the $200 billion acquisition program comes down the pipeline.

Yet, as Richardson told Senate estimates, “The number of service providers plus contractors and consultants would outnumber public servants. There is nothing unusual in that. We only have an estimate of the number of people employed by service providers. … With consultants, again, you enter into a contract with a firm to do a particular job. The number of people they employ to do that job is their business.”

Quite so. Big or small government? Take your pick.