Jacinta Allan to cut 1000 Victorian public servants and slash $4bn from public service
The cuts are part of the long-awaited review by former bureaucrat and NAB executive Helen Silver to get Victoria’s bloated bureaucracy and soaring debt under control.
The Allan government will cut Victoria’s public service by more than 1000 positions and deliver more than $4bn in savings as part of a plan to get its bloated bureaucracy and soaring debt under control.
Premier Jacinta Allan and Treasurer Jaclyn Symes on Thursday morning released the long-awaited review by former bureaucrat and NAB executive Helen Silver, rejecting recommendations to cut a total of 2000 positions and slash scores of government bodies and programs, which could have delivered at least $1bn more in savings.
Ms Silver found that adopting the full suite of 52 recommendations would have saved $5bn over four years. Instead, the government says it will achieve $4bn, despite rejecting seven recommendations outright, accepting 27 in full, three in part and 15 “in principle”.
The review urged the government to axe 78 of Victoria’s 500 public entities, but the government will cut just 29. The government has also not detailed its plan to cut up to 90 per cent of the state’s 90 advisory committees.
The changes will nonetheless shrink the bureaucracy by 1000 full-time equivalent roles, including 332 executive and executive-adjacent positions which will deliver $359m in savings. Consultant and labour-hire spending will be slashed by $113m, while office accommodation costs will fall by $427m as more staff work from home.
The cuts are needed to get control of a bureaucracy that has blown out under the Andrews and Allan governments, particularly during the pandemic. In 2013-14, public sector employee expenses were $18bn, but have more than doubled to about $38bn in 2024-25 and were forecast to reach almost $39bn this financial year. Victoria’s employee expenses growth is larger than every other mainland state over the same period.
It comes as the Albanese government is embarking on its own cost-cutting mission after the size of the federal public service jumped 25 per cent under Labor’s watch, the largest jump in a single term of government on record. The federal public sector’s wage and salary bill breached $40bn for the first time earlier in November and public sector wage growth has outpaced private-sector growth for three consecutive quarters.
But the Allan government on Thursday faced questions over why it didn’t go further, with $2.7bn of its $4bn in savings – and 619 of the 1000 public service positions – already baked into this year’s budget.
Ms Allan said “families are watching every dollar they spend, and they expect the government to do the same”.
“We’re making sure our public service is laser-focused on Victorians – good schools, good healthcare, safe communities and real help with the cost of living,” she said.
Liberal leader Jess Wilson declared the review was “a $4bn admission of failure”, saying “Labor’s mismanagement and top-heavy bureaucracy is driving Victoria deeper into debt”.
“This report issues a stark warning over the dire impact Victoria’s soon to be $1m an hour interest bill is having on our capacity to deliver frontline services now and into the future,” she said.
Among the bodies to be abolished is VicHealth, whose functions will be absorbed into the Department of Health. Sustainability Victoria, Cladding Safety Victoria, the Latrobe Health Assembly, the Trade and Investment Board, the Victorian Public Sector Commission Advisory Board, the Victorian Marine and Coastal Council, and the Road Safety Camera Commissioner and Reference Group will also be scrapped.
Key flashpoints identified by Ms Silver proved politically too fraught. The government rejected proposals to merge Victoria’s 14 water corporations into three, abolish the Geelong Authority and the Office of the Local Jobs First Commissioner, and pause the rollout of 18 early learning centres before transitioning them to private providers.
The review warned that the public service had become “top-heavy” under the Andrews and Allan governments, hampering decision-making and stifling innovation.
“This type of structure is costly, decisions are slower, staff are disempowered and innovation is stifled,” Ms Silver wrote.
The review found that cutting 78 entities would reduce the workforce by 536 positions and save $427m over four years, but the government’s decision to slash just 29 bodies will deliver only $27m.
Ms Allan and Ms Symes defended the decision to reject several recommendations, declaring Labor “will never make cuts to the frontline services that families rely on”.
The review’s release comes as the Premier seeks to project economic confidence – opening the $15bn Melbourne Metro Tunnel and forging ahead with the $34.5bn Suburban Rail Loop – even as the state’s net debt heads towards a record $194bn within three years.
Behind the scenes, the Silver review has become a key part of the government’s campaign to reassure ratings agencies – S&P Global, Moody’s and Fitch – that Victoria’s credit standing should remain steady. Interim findings from the review informed May’s state budget.
Victoria lost its coveted AAA rating in December 2020 amid the pandemic blowout, and ratings agencies have since warned of further downgrades unless Labor reins in its infrastructure spending and starts banking on upticks in revenue. The agencies have zeroed in on the contentious SRL project – the state’s most expensive transport project, which is not fully funded – warning of the potential for cost blowouts.
The review also recommended a major digitisation of the public service, including embracing the “safe and effective use” of artificial intelligence.
The government has accepted “in part” to abolish Infrastructure Victoria, which has heavily scrutinised the government’s Big Build infrastructure program in recent years including the SRL project, instead deciding to reduce its budget.
One of the toughest tasks ahead may be Ms Silver’s call to overhaul the state’s financial relationship with Canberra.
The review said Victoria received a shrinking share of federal funding relative to its population and directly paid for services, particularly in primary healthcare, that were funded federally elsewhere. Accepting this recommendation sets up a looming confrontation with the Albanese government over billions of dollars in GST, infrastructure, health, education and other payments.
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