A government insider with specific experience placing APS jobs ads in The Australian has told Crikey that Abbott's freeze has the "potential to devastate The Australian."

Tony Abbott’s plan to save $3.8 billion by hacking 12,000 jobs out of the federal public service could “devastate” The Australian newspaper, according to a well placed Canberra insider.

The loss-making News Limited broadsheet, which is propped up by its more successful sister tabloids, relies on government recruitment and tender advertisements for over $10 million in annual revenue. The federal bureaucracy is by far The Australian‘s biggest client.

But under Abbott’s controversial target, which would be achieved by failing to replace fleeing mandarins, the re-advertising of new positions would be banned for two years, killing the paper’s key income stream.

A government insider with specific experience placing APS jobs ads in The Australian told Crikey the government’s total non-campaign advertising spend was between $40-45 million last year, 80% of which was recruitment. Around 30% of that amount, or $8-10 million a year, ends up in The Australian‘s coffers through its 300,000-selling Saturday edition.

“Abbott’s plan has the potential to devastate The Australian,” the insider said.

In his Budget reply speech in May, Abbott, a former editorial writer for The Australian in the 1980s, said the freeze would apply to all agencies except for frontline “uniformed” operations such as ASIS, ASIO and the Australian Federal Police.

The paper’s challenge at the hands of Abbott would be somewhat ironic given its strong editorial support for the conservative side of politics. During The Australian‘s long and sustained campaigns against the Rudd government’s profligate spending, Labor ministers often wondered why the taxpayer was effectively subsidising the attack organ to the tune of hundreds of thousands of dollars a week.

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One MP took a special interest in cutting back the ads. Crikey understands that caretaker Finance Minister Lindsay Tanner, in his razor gang guise, was a keen reader of The Weekend Australian on Saturday mornings and would often personally call senior Treasury officials to complain about the ads’ size and placement.

Last July, Tanner introduced strict guidelines on non-campaign advertising which urged the use of online ads to replace newspaper splashes and banned the use of colour. A consolidated group of ads, under the “APSJobs” banner, replaced many of the expensive notices placed by individual departments. The result, according to the insider, was a reduction in total spend of about 20%.

However, the Tanner ruling only applied to departments covered by the Financial Management and Accountability Act. Other agencies that fall under the Commonwealth Authorities and Companies Act, including the ABC, the Reserve Bank and the Australian Nuclear Science and Technology Association, are exempt and continue to advertise freely.

A Crikey analysis of The Weekend Australian‘s May 29 edition shows a combined total of two full pages of APS job advertisements, which at the most-discounted card rate of $107.40 per column centimeter, equates to around $135,000 in revenue. A further full page of tender advertisements puts the total haul from the taxpayer for that edition at over $200,000.

Media analyst Steve Allen from Fusion Strategy told Crikey that the demise of executive recruitment in The Weekend Australian would rip a “sizeable hole in their revenues” and that News’ successful online job ad operation would also be hit hard. Allen said that the paper would likely resort to the general recruitment market to fill the gap.

Speculation has swirled for years about The Australian‘s financial performance, with its revenue figures a closely guarded secret. In one year it was alleged to have broken even, although for the most part makes small losses, according to well-placed insiders. But News chief Rupert Murdoch seems keen to keep the masthead afloat, perhaps to retain a foothold in national political debates.

The Australian wouldn’t be the only newspaper to suffer at the hands of Abbott. The Friday edition of the Australian Financial Review would also be wounded, with a predicted fallout of around $3 million a year.

A spokesperson for The Australian‘s ad sales department, Rachel Savio, told Crikey that it was difficult to comment in light of the current uncertainty in Canberra, but that the paper would “seek further insight into their full intentions” if an Abbott government seizes power.