By Leith van Onselen

More details have emerged about the large cull about to take place across the federal public service.

According to The Australian, up to 70 government agencies will be either scrapped or merged, with four major bodies – including the Royal Australian Mint and Defence Housing Australia – also to be placed on the block for sale in the first stage of privatisation:

The full restructuring plan, obtained by The Australian, is estimated to save $470 million over four years in a two-stage reform in tomorrow’s budget, to be followed by more cuts in a third stage at the end of this year. …the federal bureau­cracy has swelled to almost 1000 entities, ranging from big agencies to obscure committees… Selling Defence Housing Australia is tipped to raise $1 billion while the government will also launch studies into the sales of Australian Hearing and the Royal Australian Mint, worth hundreds of millions of dollars… The Australian was told that the agenda could be expanded over time to include the Australian Rail Track Corporation — said to be worth $4bn — but that Australia Post was not on the list.

The AFR has put the figure of scrapped or merged agencies at 50, but also notes that 16,000 Commonwealth public service jobs are at risk; although 14,500 of these are already captured by the efficiency dividends Labor had already imposed across the public sector: The government believes there are between 900 and 1000 government bodies but, a source said, no one knows the exact number. The situation is now “out of control’’, and was creating confusion and cost for the community. As noted last week, there does indeed appear to be some scope to streamline operations and trim back office staff across the Commonwealth public service. A quick glance at “Public administration and safety” employment in the ABS quarterly employment statistics – a proxy for the federal and state bureaucracies – shows that public sector employment levels have surged relative to population since the early 2000s, suggesting there is room to cut:

Moreover, this growth in public sector employment appears to have been led by the ACT, as illustrated in the next chart:

The ultimate test for the Abbott Government will be to ensure that the cuts do not impact adversely on front-line service delivery (e.g. nurses, teachers, social workers, etc), which is where pain will be felt most by the voting public.

Meanwhile, the Government has also flagged that it will cut some of the $10 billion of assistance provided to the private sector , so that business shares some of the burden of adjustment:

Joe Hockey told The Weekend Australian that his vow to end the “age of entitlement” meant asking business to give up some of the payments and services Canberra had been giving it for years… “Those who depend heavily on government support will not necessarily receive the same support into the future,” he said. “Business has a responsibility to manage itself in the same way that we expect (others to do so), other than those most vulnerable in the community.” Government sources told The Weekend Australian that agencies would be scaled down and fees ­applied to more services for business in a “cost-recovery” plan to cut expenses. The savings in the budget amount to hundreds of millions of dollars as part of a longer-term plan to reduce the reliance on corporate welfare.

On the face of it, this seems like a good move by the Abbott Government, although the devil will obviously be in the details. It does, however, highlight the inherent inconsistency in granting millions of dollars of funding for Tasmanian firms Huon and Cadbury, along with the tens-of-billions of dollars earmarked for local defence manufacturing, when high quality imports are available at a fraction of the cost.

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