Labor pledges to replace 2.5% efficiency dividend and spare public sector jobs

By Stephen Easton

Tuesday June 28, 2016

The federal opposition promises to take a gentler approach to pushing public sector efficiency than the government has over the past few years if it manages to win Sunday’s election.

Shadow ministers Tony Burke and Brendan O’Connor say Labor will investigate more targeted savings measures to replace the 2.5% efficiency dividend that would be maintained if the Coalition was returned to power.

The opposition spokesmen incorrectly describe the budgeted 2.5% setting as an “increase” in a statement released over the weekend. Although they could have instead used the line that it is broken promise, as the government said it would drop the rate to 1.0% over the subsequent financial year.

Burke and O’Connor say the government’s approach since 2013 has been to rely on “harsh” efficiency dividends as well as privatisation and outsourcing to save money. “The way the Abbott-Turnbull Government has treated its own workforce is unacceptable,” they jointly declare, claiming they could find savings by cutting back on other costs that have increased under the Coalition:

“Instead, Labor will achieve the same level of budget savings as the Government’s measure, with savings from areas which minimise the impact on jobs and the positive role of the public service.

“In particular, Labor is confident that genuine efficiencies can be achieved by targeting ballooning contractor and consultant costs, advertising and travel.”

Earlier: Malcolm Turnbull releases revamped digital services policy

The opposition says the Parliamentary Budget Office advised it that departmental expenditure on consultants and contractors in the public service was $1.9 billion in 2013-14, and that this grew 20% to $2.3 billion for the following year. Average spending for “management and business professionals” and “administrative services” was $7.5 billion over the past six years, according to data Labor extracted from AusTender.

O’Connor and Burke describe a plan to find the same amount of savings as the government without as many job losses:

“Labor will conduct a review, to be concluded by 1 January 2017 to investigate how to replace the 2016-17 Budget Efficiency Dividend and the 2015-16 MYEFO Efficiency Target for national cultural and collecting institutions in the 2017-18 Budget with new measures that achieve the same savings, without targeting staffing costs.

“This review will focus on enabling the shift towards e-gov and digital transformation, however still ensuring that this does not compromise service, accessibility and the capability of the public sector. It will feed into the 2017-18 Budget process.”

A Labor government would also take “$500 million the government has set aside for public sector transformation” and allocate it to “keep Medicare in public hands” according to the statement, which the shadow ministers released on Sunday. If Labor wins, it promises:

“This funding will also go to improving service provision at the Australian Tax Office and the Department of Human Services to reduce Centrelink call waiting times and increase call centre staffing.

“The government’s new efficiency dividend would see further cuts being made to essential areas of the public sector, already under pressure, hindering many departments ability to deliver quality public services and public policy. Labor recognises that privatisation and outsourcing can threaten quality public services and understands the social and economic impacts of wide scale cuts and austerity on both jobs and services.”

The two would-be ministers attack the budget cuts that have resulted in large job losses at the CSIRO, Tax Office, Australian Securities and Investments Commission, as well as the current public service enterprise bargaining policy, which they say is “unfair, ideological and has resulted in a complete mess” as far as employees are concerned.

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