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Half-billion dollar public sector productivity fund

federal budget 2016

A $500 million public sector productivity fund is to be created to drive automation and business re-engineering and other efficiency initiatives in the federal government.

The fund, announced in Treasurer Scott Morrison’s 2016-17 federal budget, is to be financed from $1.9 billion of agency savings coming from a continued — but declining — efficiency dividend.

According to the budget papers the government will maintain the efficiency dividend at 2.5% in 2016-17 and 2017-18, then reduce it to 2% in 2018-19 and further reduce it to 1.5% in 2019-20. Net savings of $1.4 billion will be generated by continued application of the dividend.

Average staffing level is being kept at 2006-07 levels with a forecast ASL of 167,155 for the Australian Public Service in 2016-17. This compares with a peak of 182,505 in 2011-12.

As part of its smaller government program, a further eight agencies will be subject to functional and efficiency reviews, including the three major central agencies of Prime Minister and Cabinet, Finance and Treasury.

Functional reviews to date have netted savings of $2.7 billion, the vast bulk from the mega Social Services portfolio, where $2.3 billion of savings were identified.

Scoping studies into government activities are to continue, as well as a series of targeted reforms around shared services, a single streamlined grant system and standardising of business processes and systems.

The government is also hoping to reap major cost savings from its digital transformation program. Digital service delivery promises efficiency savings of many billions but these have not been captured in any forward savings.

The first efforts to apply modern analytic approaches to better targeted service delivery are being undertaken in the Australian Taxation Office, the Department of Heath, the Department of Human Services and the Immigration and Border Protection portfolio.

According to the budget papers the public service will implement the Australian Government Public Data Policy and “collaborate with the private and research sectors to collect, manage and share data, along with new digital technologies to deliver quality services aster and at lower cost.”

The budget papers also report the government is seeking to position the public sector to respond to growing public demands, including “more open and collaborative solutions to emerging complex challenges and opportunities.”

“By increasing the focus on innovation and the modernisation of public services and on efficiencies achieved by maximising the opportunities of a digital dividend wherever possible, the government will be an exemplar in how it invests in and uses technology and data to better deliver quality services faster and at a lower cost.”

Other agencies which will be subject to an efficiency review are:

  • Australian Bureau of Statistics;
  • Department of Immigration and Border Protection;
  • Australian Federal Police;
  • Bureau of Meteorology; and
  • Murray Darling Basin Authority and water-related functions within agencies.

Author Bio

Tom Burton

Tom Burton is publisher of The Mandarin based in Melbourne. He has served in various public administration roles, specialising in the media and communications sector. He was a Walkley Award-winning journalist and executive editor of The Sydney Morning Herald. He worked as Canberra bureau chief for the Australian Financial Review and as managing editor of smh.com.au. He most recently worked at the Australian Communications and Media Authority.