The Andrews govt is set to pay out older bureaucrats in an effort to reduce staff costs

Generous “early retirement” packages are set to be offered to older public servants in a desperate bid by the Andrews government to reduce staff costs.

Older public servants are set to be offered generous “early retirement” packages in a desperate bid to reduce staff costs. Picture: Nicki Connolly

Older public servants are set to be offered generous “early retirement” packages in a desperate bid to reduce staff costs and rein in the State Budget.
The move to pay out mid-tier bureaucrats comes as the Andrews Government scrambles to contain spending in the public sector at the same time as it funds expensive election commitments.
The government’s expenditure review committee has made it clear that health and SEC commitments are untouchable during funding negotiations, but that capital works projects will have to be cut back significantly in some sectors — once pre-election promises are booked.

The pay outs come as the Andrews Government scrambles to contain spending in the public sector. Picture: Nicki Connolly

This is likely to impact portfolios of housing, environment, education and regional development.

“The pressures in the budget are forcing some pretty tense discussions,” a senior public servant said.

Huge cost blowouts on major projects, and the state’s record debt level — forecast to surpass $166bn by 2026 — will likely spark further cutbacks if economic conditions worsen.

A government spokesperson said “governments right around the world are dealing with challenging economic conditions but we’re focused on delivering the projects that Victorians voted for, from education to health, transport and bringing back the SEC”.

The Sunday Herald Sun can reveal government departments are set to apply to the tax office for an allocation of early retirements, with permission required by the ATO due to generous tax concessions associated with the scheme.

The scheme, which first ran in 2021, pays out leave entitlements plus a lump sum of $15,000, as well as two weeks’ pay for every year of service, capped at 30 weeks.

Those who apply must be over a certain age, and are barred from working in the public service for 12 months.

This short period has led to criticisms that it could see a revolving door for some staff, due to the fact the positions retirees had are not made redundant.

The looming reopening of the retirements scheme comes as the Sunday Herald Sun can reveal public service staff numbers have ballooned to more than 58,400 people — up 20,500 since Daniel Andrews swept to power.

Government employee expenses cost taxpayers almost $30.6bn in 2021, up from $18.4bn in the year ending June 2025, according to budget papers.

Public service staff numbers have ballooned to more than 58,400 people — up 20,500 since Daniel Andrews came to power. Picture: Valeriu Campan

The Victorian Public Service – which includes those employed by government departments and administrative offices – saw a 17.6 per cent employment spike in 2020-21 alone – the highest increase across the entire public sector workforce, according to the Victorian Public Sector Commission.
This included an extra 3062 fixed term roles at Covid Quarantine Victoria, and more than 2000 new employees across the Department of Health and the Department of Families Fairness and Housing.

More broadly, there are now nearly 80,000 more public sector workers — which includes positions such as teachers, public health nurses, and police — in Victoria since Daniel Andrews won office in 2014.