Facing the chop: State public service review to target highest-paid bureaucrats

Some of Victoria’s highest-paid bureaucrats are facing the axe as the Allan government moves to scrap underperforming programs and merge or abolish entire entities in a clean-out of the Victorian Public Service.

Up to 3000 public servants could lose their jobs after Treasurer Jaclyn Symes announced an independent review of the sector and conceded previous attempts to cut government spending had failed.

Treasurer Jaclyn Symes and Premier Jacinta Allan announce the review on Thursday.Credit: Justin McManus

Symes and Premier Jacinta Allan said on Thursday the government had appointed Helen Silver, a deputy chair of the Victorian Managed Insurance Authority and a former top bureaucrat in both Labor and Coalition governments, to report back on June 30.

The review’s terms of reference asks for “a focus on entity consolidation” while targeting inefficiencies, duplications and programs that have stayed on the books past their usefulness. There are more than 3000 public entities in the state.

“Can you consolidate some of those operations across government in similar entities? I think, yes. But again, I don’t want to pre-empt the recommendations,” Symes said.

Between 2000 and 3000 people were expected to lose their jobs – about 5 to 6 per cent of the workforce – and the government hoped to save “several billions” of dollars, she said. Some existing vacancies would not be filled under the plan to bring the public service back to its pre-pandemic size, proportionate to the population.

The review will also focus on shedding jobs from the ranks of nearly 2000 public service executives earning an average salary of $255,000.

Frontline services and integrity agencies would be excluded, Symes said. But she accepted that some public-facing programs – “grey areas between what some people think of frontline services and what others don’t” – could be cut.

“There will be some difficult decisions to make, but they are important decisions,” Symes said. “Some people won’t like some of the recommendations.”

Silver’s appointment was welcomed by Bob Officer, the independent auditor for the Kennett government in the 1990s. Former premier Jeff Kennett said while Silver was a good choice to lead the review, it shouldn’t be necessary.

“Why in God’s name would a government need to have an inquiry into the staffing of their back-of-house public servants?” he said.

“They are asking Helen to do the job they are not prepared to do. They should be reducing back-of-house public servants, but they don’t want to accept responsibility for it.”

Recent budgets have promised to cut the wages bill but, despite repeated government requests, the Victorian Public Service has been unable to identify the necessary savings.

Former treasurer Tim Pallas tried to reduce the workforce in the 2023-24 budget, but the number of full-time equivalent jobs increased slightly instead to 54,839.

Employee expenses were projected to be $37.53 billion this financial year, up from $24.99 billion in 2018-19. Victoria’s wages bill has also consistently exceeded its forecast costs, according to analysis by the Parliamentary Budget Office requested by the opposition, which found it was $755 million higher than projected for 2023-24.

The government last year rejected a recommendation by an independent review to merge the state’s 76 independent government health services after community backlash.

Symes said she was determined the review wouldn’t be for nothing and hoped to accept all recommendations “because it’s needed to address the budget recurrent problem that we have”.

Department secretaries and ministers had already been asked to identify possible cuts, as revealed by The Age earlier this month.

An interim report will be handed down in April to incorporate the public service cuts into the state budget – which is due to be released on May 20 – before a final report by June 30.

Karen Batt, Victorian secretary of the Community and Public Sector Union, said her organisation would fight the cuts.

“The bone is bare,” she said. “Crazy, ill-thought-through proposals end up costing the government more as our population booms and demand for services grows.”

The union has long called for the government to bring external agencies and authorities back into their relevant state departments, particularly in the arts and Department of Transport and Planning, to avoid duplication.

Victorian Community and Public Sector Union secretary Karen Batt says she’ll fight the cuts.Credit: Eddie Jim

Victorian Trades Hall secretary Luke Hilakari said making comparisons between frontline and back-office staff didn’t wash. He questions who would pick up the work dropped by up to 3000 people.

“What gets cut? Who works harder?”

Shadow treasurer James Newbury said it was a “hoax review” and a diversion from cost increases in the government’s infrastructure pipeline.

“Jacinta Allan is an absolute queen of covering, not governing,” he said.

Shadow treasurer James Newbury.Credit: Justin McManus

Opposition spokesman for public service innovation Brad Rowswell said the announcement was a desperate attempt to pay down debt.

“After a decade of wage bill blowouts, financial mismanagement and excessive public sector executive growth, Labor is now pretending to care about delivering value for taxpayers’ money,” he said.

Victorian Chamber of Commerce and Industry chief executive Paul Guerra welcomed the review.

Credit: Matt Golding

“It’s never a good environment where we’re looking at removing jobs,” Guerra said.

But he added: “We’d much rather see the debt being reduced by costs being reduced, rather than seeing more taxes put on business and everyday Victorians.”

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