The break-up and sell-off of the Department of Human Services looks set to trigger a fresh round of deep cuts to the federal public service.

The government began the process on Friday of searching for private sector players to take over $29 billion in Medicare and pharmaceutical benefits currently undertaken by Human Services, the government’s largest department.

Up to 20,000 public servants could either lose their jobs or be farmed out to the private sector under the plan and it looks likely there is more pain to come for the bureaucracy.

The sell-off is a recommendation of the federal government’s National Commission of Audit, one of many that did not make it into May’s federal budget. Departments and agencies are now braced for announcements of more of the commission’s ideas.