Australian federal budget reveals 1bn of work cut as public sector gets big boost

The Albanese Government has cut $1bn in outsourcing and committed to rebuilding the public service by creating thousands of new jobs, in the wake of several consultancy scandals.

The PwC scandal will cost the big four accounting firms at least $1 billion in lost work over the next four years, as consulting costs are slashed.

The Federal Government has also pledged to run the ruler over its consultancy and contracting deals for a second time as it weeds out expensive contracting deals.

PwC has dominated the headlines following claims it sold confidential government tax advice to clients.

Consultancies are out for the Federal Government, to be replaced by more public servant roles. Picture: Getty

KPMG, Deloitte and Ernst and Young have been smashed in the fallout from the PwC accusations.

The new cuts will bring the total saved by ditching consultants, contractors and labour hire firms to $4bn since 2022, the government said.

More than 7500 public service jobs are also to be created at Services Australia as part of a $1.8bn revamp of the troubled agency, which used advice from PwC during the Robodebt scandal.

The government pitched the move as part of a commitment to rebuild the public service following “a decade of outsourcing, reduced service outcomes and under investment under the former government”.

“The actions the government is taking to rebuild the public service and reduce its reliance on consultants and contractors recognises that delivering outcomes for Australians must be built on the foundations of a strong public service,” Treasury said in budget papers.

Treasurer Jim Chalmers’ third budget will boost the public service over the coming year to 209,000 in the 2024/25 financial year – a 9 per cent increase.

Military personnel and reservists will exceed 85,000, bringing the total number of public servants to almost 300,000, according to the latest budget papers.

The government’s employee expenses was forecast to reach $29.4 billion in the next financial year, an increase of 7 per cent.

Originally published as Australian federal budget reveals 1bn of work cut as public sector gets big boost