THE federal government has been urged to slash the size of the public service by more than 27,000 jobs to bring numbers back to 2001 levels.

But the public sector union argues any further cuts would have “disastrous consequences” for ordinary Australians and further degrade access to services including Centrelink and Medicare.

In a parliamentary research paper distributed to federal MPs on Monday, free-market think tank the Institute of Public Affairs (IPA) argued a “substantial reduction” in the size of the public sector was required to tackle the national debt, which is forecast to hit $1 trillion by 2037.

Based on data from the Australian Bureau of Statistics (ABS) and the Australian Public Sector Commission (APSC), the paper puts the number of Commonwealth public servants as of June 2017 at 239,800, down 1.4 per cent on the previous year when there were 243,200 employees, and down from a peak of around 250,000 during the Rudd and Gillard governments.

“Official data shows that public sector employee numbers are declining, but the public sector wage bill continues to increase,” IPA legal fellow Aaron Lane said in a statement. “Although progress has been made, further consolidation is needed.”

The Liberal-aligned group has previously called for the public service to be reduced to “at least” the 2001 low of 212,784. On current figures, that would require a reduction of 27,016 positions, or approximately 11.3 per cent.

“Worryingly, at a time of perennial budget deficits, the cost of the public sector continues to increase,” Mr Lane said. “This means that a reduction in the number of public sector employees has not led to overall budget savings.

“Annual wage and salary costs amounted to $21.1 billion for 2016-17. This is up approximately $95 million on the previous year, and an increase of $5.75 billion since 2007-08.”

Mr Lane said the increased costs had been fuelled by pay increases locked in by “generous” public sector bargaining agreements, and by a growth in the proportion of executive and senior executive positions.

“For instance, in 2002, 19.4 per cent of APS employees were engaged at executive level classifications — in 2017 the proportion is 26.2 per cent,” he said.

“ABS figures show that average weekly earnings in the public sector are consistently higher than that of the private sector. The latest figures report that average weekly earnings in the public sector were $1410.60 compared to private sector earnings of $1123.50 — a difference of $287.10.

“The gap between public sector and private sector pay has widened over the last decade, indicating that wage increases in the public sector are outpacing those in the private sector.

“Of course, pay increases in the private sector are funded by businesses earning revenue through creating value — pay increases in the public sector are funded through higher taxes or larger deficits.”

Community and Public Sector Union national secretary Nadine Flood hit back at the research. “Seriously, what planet does the IPA live on? They really need to get out more if they think cutting more Commonwealth jobs is a good idea,” she said.

“The Turnbull government’s shortsighted job cuts might have curried favour with extreme elements like the IPA and [Liberal Senator] Eric Abetz, but they’ve had disastrous consequences for ordinary Australians as public service standards have fallen.

“IPA-style cuts are the reason why you simply can’t get through to Centrelink on the phone, as 55 million calls went unanswered last year alone. They’ve also led to an ever-growing list of policy disasters for this government, from Census fail to the tax office’s online woes.”

Ms Flood said the IPA wanted public sector jobs cut “so that money can instead be handed over to consultants like KPMG, Deloitte, EY and PwC”.

“Outsourcing is the Turnbull Government’s dirty secret, downgrading public services so they can line the pockets of corporations that often pay little or no tax,” she said.

“Billions of dollars is being wasted on outsourcing, which is why a Parliamentary inquiry was launched just last week. There’s been a deafening silence from the IPA on this shameful waste of taxpayer money, which makes their real motivations crystal clear.”

Shadow Employment Minister Brendan O’Connor said, “You can tell a lot about a government by how it treats its workers and Turnbull and his Liberals have presided over deep cuts to public sector jobs.

“Is it any wonder we have regularly seen critical tax office system crashes, millions of unanswered Centrelink calls, long waits for Medicare and gaps in our crime fighting capability? More cuts to our public service would further erode the expertise and experience of our public servants.”

Employment Minister Michaelia Cash did not respond to requests for comment.

frank.chung@news.com.au