Coalition takes aim at public servants as Dutton looks to cut 40,000 jobs

Public servants in the federal health, education and veterans’ departments have been singled out as the Coalition ups its promise to cut 40,000 bureaucrats in a political fight over the $30 billion public service wage bill.

Tuesday night’s budget showed the Albanese government will employ 213,349 public servants in 2025-26, boosting headcount by 41,411 over its term and fuelling debate over government spending as Labor records its first budget deficit before the federal election.

Dutton has singled out Canberra-based public servants for cuts, although only 37 per cent of the federal bureaucracy works in the capital.

Opposition Leader Peter Dutton on Wednesday confirmed at least 40,000 public servants would be cut from Canberra under a Coalition government as he banks on those savings to pay for extra Medicare spending he has promised to match Labor’s major health announcements dollar-for-dollar.

Dutton revised his target up from 36,000, after the budget revealed Labor will hire another 3400 government workers this year.

Asked on Wednesday whether “40,000 was your target to cut?” the opposition leader said: “That’s exactly right”.

“We want an efficient public service, but growing by 40,000 the number of public servants in Canberra is not going to help families put food on their table or deliver the services that they need as a family or as a pensioner,” he said.

Thirty-seven per cent of the federal public service is based in Canberra, which is slightly under 80,000 workers. Cutting all 40,000 workers from the capital would represent half that workforce.

The Coalition has declined to confirm which departments it would shrink but several interviews given by Dutton and his frontbenchers over recent weeks indicate their thinking.

Shadow treasurer Angus Taylor on Wednesday signalled the health department had grown an outsized amount, echoing Dutton’s previous comments that singled out the federal health and education departments.

“We’ve seen bulk-billing rates collapse and yet the health departments have grown by 40 per cent. I mean, this is just insane stuff, and it can’t go on,” Taylor said on Wednesday.

Opposition Leader Peter Dutton uped his promise of public service cuts to 40,000 workers on Wednesday.Credit: Alex Ellinghausen

Two weeks ago, Dutton said “we’re not cutting frontline positions” when asked where cuts would come from, before saying: “We have a health department and an education department – the Commonwealth government doesn’t own a school, we don’t run a hospital, we don’t employ a doctor or nurse or a teacher.”

The Coalition has also emphasised it would not cut frontline services when asked about the Department of Veterans’ Affairs – which has grown under Labor to clear backlogs of unpaid claims – but finance spokeswoman Jane Hume on Monday questioned whether those workers were still needed.

“If it’s a backlog and you’re clearing it, why do they need to be permanent staff?” Hume asked on Sky News. Her comments prompted crossbench senator Jacqui Lambie to furiously demand Hume answer whether she would cut the veterans’ department on Wednesday, but Hume did not address the issue.

Credit: Matt Golding

Hume has also called for further curbs on spending in the National Disability Insurance Scheme.

The Coalition has been vague about how it will reduce staffing levels. Taylor, when asked on Wednesday whether he was telling 41,000 people they would lose their jobs within a few months, said: “Look, no, attrition will play a very significant role”. Dutton, however, has been less clear as he banks $6 billion in annual savings.

A Liberal source said the Coalition was considering cuts from every government department that had grown under Labor. They said they did not want to target specific offices to avoid comparisons with US President Donald Trump, who this month gutted the country’s federal education department.

Labor is seizing on the lack of detail to accuse the Coalition of mystery cuts, but the government is also under scrutiny for failing to account for federal bureaucrats’ 11 per cent pay rise over three years in its projections, leading the Coalition to claim it is masking the true cost of a ballooning bureaucracy.

Hume took aim at the government’s accounting after Tuesday’s budget. “They [public servants] have been given an 11 per cent pay rise and that hasn’t been accounted for in this budget. Public sector wages [are a] flat line,” she said on Wednesday.

“Somewhere there is a black hole in this budget and we need Katy Gallagher and Jim Chalmers to front up and tell us where it is.”

Finance Minister Katy Gallagher defended hiring extra public servants despite budget pressures. “The vast majority of those ... are already working, they’re just working under expensive labour hire arrangements as a hangover from the former government,” she said on Wednesday.

According to the budget, 87 per cent of this financial year’s staffing increase – and a quarter since 2022 – are former consultants or contractors converted to public servant roles.

Gallagher also rebuffed the opposition’s arguments that extra workers added no value, saying staffing levels were insufficient under the Coalition. “If you remember, we had robo-debt. We had 42,000 unallocated Veterans’ Affairs claims. Veterans who weren’t getting their payments because their claims weren’t being allocated,” she said.

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