Budget '14: smaller rational government, but no Armageddon

By Tom Burton

May 13, 2014

The budget shuffles many bureaucratic deck chairs, tosses some overboard, but in the main the good ship HMAS Australia Government has come through the first Hockey budget relatively unscathed.

Those hoping the budget might see a fundamental change in the size, shape and delivery of government will be disappointed.

In dollars, the net savings from what Finance Minister Mathias Cormann calls “smaller, more rational government” is about $500 million over the next four years.

Net, the new budget will cause 2000 public servants to lose their job, on top of the 14,500 already slated to go from the previous government’s decisions. Comparing this financial year with next, the federal payroll will be cut by 4591 jobs, a 1.8% cut.

Tough if you are the one to lose your government pay cheque, but not exactly Canberra Armageddon. If anything it seems more like a serious spring clean after two terms of Labor Party rule.

And despite the predictions otherwise, it was probably always going to be the case.

The election shortened the budget review period, some of the major reviews like the National Audit Commission were made public only last week, and there was a genuine sense from Hockey and Treasury that the current economic fragility meant it was not time for fiscal blood on the floor.

So this budget was always going to be the first chapter of the Abbott administration’s commitment to smaller government.

Asked by The Mandarin if this represented the government’s response to the Audit Commission Hockey was very clear: “There is more work to be done, you can’t turn around this ship in just 20 minutes, this is just the start.”

By the release of the mid-year budget review, Cormann is promising what he calls the “third and most comprehensive phase of consolidation in the number of government bodies”.

A particular focus of this next stage will be to reduce the number of small agencies, which Cormann says carry disproportionate and wasteful overheads.

The new administrative arrangements when the government came to power saw a significant streamlining and simplification of portfolios.

Tonight’s budget continues this work. Some smaller agencies such as the Australian Information Commissioner, the National Competition Council and the Telecommunications Universal Service Management Authority have been absorbed into their mother departments and regulators.

Agencies such as the Australian Tax Office, the ABC, the Australian Securities and Investment Commission, the Australian Federal Police, the Australian Communications and Media Authority and the Bureau of Meteorology have been asked to cough up extra savings. Only the ACCC was spared, winning an extra $17.7 million to monitor climate change prices.

There are a few mergers of bigger organisations such as the long overdue integration of the border protection services provided by Customs and Immigration. And a raft of advisory and consultation bodies that make up the alphabet soup of Commonwealth stakeholder engagement has been given a pink slip.

Medicare Private is already being prepped for sale and some smaller agencies, including Defence Housing, the Mint and ASIC’s registry are being primed for sale.

And the national collection agencies dotted around Canberra’s Lake Burley Griffin are all being told to consolidate their corporate functions.

Secretaries and agency heads get their pay frozen for the coming year, while 112 programs have their indexation “paused”.

The much-derided communications units embedded in most government agencies are being targeted for savings of $43 million over the forward estimates by moving to what the budget papers call “more efficient practices”.

The previous government’s favourite cost-cutting device — the efficiency dividend — has been further tightened by 0.25% for the next three years. Savings are expected to come from reduced advertising, consultancy and travel costs and red tape initiatives.

This will be accompanied by the development of a so-called contestability framework. This framework will be a three-year Department of Finance program to assess if functions should be open to competition, and how best to do this. Contestability can come from outside or within government.

The structural decline in budget revenue means many of the changes announced tonight were probably inevitable, no matter which government was in power. The next phase of red tape reduction, agency consolidation and the contestability work means the focus on right-sizing the Australian public service is going to continue.

About the author
Inline Feedbacks
View all comments
The Mandarin Premium

Insights & analysis that matter to you

Subscribe for only $5 a week


Get Premium Today