Treasurer Tim Pallas reveals plan to cut government spending by $4 billion over four years
Unions fear public servants will lose their jobs as the state government reveals plans to slash $4 billion in spending — more than double its initial target — after a lengthy review.
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Thousands of public servants face losing their jobs as the Andrews Government tries to revive its troubled Budget with a savage $4 billion savings blitz.
After spending its first term in office handing out generous wage deals, jacking up spending and creating dozens of new authorities stuffed with bureaucrats, the government is now desperately trying to reign in costs.
The high-stakes bid to reduce its $70 billion Budget comes amid cost blowouts on major projects and a $600 million bill for this summer’s bushfire crisis.
Treasurer Tim Pallas originally promised to take a scalpel to the public service to save $1.8 billion over four years, but revealed on Wednesday he would now axe $4 billion in spending.
The Herald Sun understands back office staff in corporate services will be targeted, with the Department of Health and Human Services likely to be among the worst hit.
Mr Pallas said job losses were a “last resort” and maintained frontline services would be protected from the savings drive.
But other Labor ministers conceded it was inevitable that “lots and lots of people” would be put out of work.
“It won’t just be hundreds,” one said.
The Community and Public Sector Union — which is already furious about the government’s 2 per cent cap on pay rises — was blindsided by the move.
“It’s an outrageous late ambush … that raises the ante to a whole new level,” secretary Karen Batt said.
A stealth program of cuts is already under way, with freezes on external hiring, employees not having contracts renewed and tighter rules on using consultants.
Victoria's public sector wages bill has soared by 40 per cent to more than $26 billion since Labor came to power, and now makes up a third of government spending.
The state Budget has also been hit by big GST and stamp duty writedowns, with Mr Pallas forced to slash this year’s $1 billion surplus to $618 million last December.
He said on Wednesday that $600 million would be spent on the firefighting effort this financial year, and more major investments are expected after June to help communities recover and rebuild.
Coronavirus has caused further economic headaches, and Labor figures are also worried that the government could be forced to resolve disputes on the West Gate Tunnel and Metro Tunnel projects by handing over at least hundreds of millions of dollars.
Mr Pallas said he was “driving an efficient Budget” and staff and resources would be reallocated to focus on the government’s election commitments and meeting the “changing priorities of society”.
“I’m not having out-of-date, unproductive programs — that (money) needs to be redirected to the effort that we’re putting in place,” Mr Pallas said.
“Our aim would be to try and avoid losses in staff numbers, but to the extent that that’s not possible, we have industrial obligations we have to meet and it will be a last resort.”
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Ms Batt accused the government of trying to “cut the very people who’ve spent their summer fighting fires and helping save homes, communities and our wildlife to find that extraordinary amount”.
“I bet the Treasurer’s glad he’s already pocketed his pay rise,” she said.
Shadow Treasurer Louise Staley demanded the government reveal how it planned to save $4 billion.
Workers fear the VicRoads registration and licensing division could be privatised as part of the government’s savings efforts, but Mr Pallas denied the service would be sold off.
He said a scoping study was under way to consider a private sector partnership and any changes would benefit motorists.