Dutton’s plan to cull public servants isn’t just risky – it’s misguided

There are a lot of nervous public servants whose futures will go on the line when Anthony Albanese finally sets the election date.

They’re nervous because Peter Dutton has said that tens of thousands of them will have to find new jobs if the Coalition is elected. But voters who aren’t public servants should be nervous, too.

The Coalition has made clear it would reduce the size of the federal public service.Credit: Rhett Wyman

Dutton is clear about what the public service faces if there is a change in government. In the Coalition’s “Let’s Get Australia Back on Track” policy document, which sets out its election priorities, it says that “the size of the public service has exploded under Labor, with 36,000 extra Canberra-based bureaucrats employed since the last election”.

When Albanese committed to sinking an extra $8.5 billion into Medicare, Dutton matched the promise and said axing public servants would be instrumental to covering the cost, reasoning that those extra 36,000 public servants come “at a cost of $6 billion a year, or $24 billion over the forward estimates. This program totals $9 billion over that period. So, we’ve well and truly identified the savings.”

To their credit, the Coalition’s claim about growth in the public service under Labor is absolutely correct. There’s now close to 200,000 federal government employees across Australia. But there are not an extra 36,000 public servants in Canberra. In fact, not even a majority of the 200,000 are in the nation’s capital (it’s around 37 per cent).

The Australian Tax Office, for instance, is home to the second-largest number of public servants with more than 21,600 employees on the payroll (Services Australia is the largest with almost 34,000). Of this, around a quarter are located in NSW, including the regional centre of Albury, where almost 900 federal public servants work and live. Then there’s another 430 or so in Gosford, more than 300 in Townsville, 220 in Traralgon and 60 in Burnie. All up, less than 10 per cent of all ATO employees are in Canberra.

During the last election, Labor came to office promising to reverse the Coalition’s freeze on public servants, which was introduced by Tony Abbott and lasted all the way through Malcolm Turnbull and Scott Morrison’s respective tenures.

Under Abbott, public servant numbers quickly fell, but a shadow army of 50,000 consultants and labour hire workers was created just as fast, as departments found they needed people to carry out the government’s wishes – which quickly created problems that are still being felt today.

Perhaps the worst example of this was the catastrophe that became the Department of Veterans’ Affairs, where labour hire staff allowed the wait list of claims for assistance grow to 60,000.

The Royal Commission into Defence and Veteran Suicide drew a direct link between the delay in processing claims and the mental and physical health problems faced by veterans, finding the department had been “insufficiently resourced to process claims”.

When Labor returned to office in 2022, there were fewer than 1700 public servants in Veterans’ Affairs. There are now more than 3600, and that boost to the workforce has cleared the backlog of 60,000 claims and found an additional $13 billion in payments due to our veterans.

This affair stands out as one of the most egregious examples of the costs associated with not using public servants, but that’s not to say public servants are sacrosanct or that labour hire firms should never be used.

But simply setting a numerical target, as Dutton has done, can be a recipe for disaster. Just look at Elon Musk’s efforts in the United States, where a cull of 350 staff at America’s National Nuclear Security Administration last month had to be reversed after the Department of Government Efficiency was told most of these people were responsible for keeping the country’s nuclear arsenal safe.

There are ways a Coalition government can reduce staff numbers in a way that protects services or improves them. Anyone who says otherwise obviously hasn’t seen the public service up close. But there’s a difference between a scalpel and a chainsaw.

The last government ended up throwing cash at the National Archives which, because of funding and staff cuts, was watching bits of Australian history literally turn to dust.

Whether a Coalition government can reduce the number of public servants without hitting service levels and hindering its own ability to make good decisions once more is yet to be seen, but Oscar Wilde was on to something when he warned about people who knew the cost of everything but the value of nothing.

Shane Wright is a senior economics correspondent for The Age and The Sydney Morning Herald.

The Opinion newsletter is a weekly wrap of views that will challenge, champion and inform your own. Sign up here.