Modern Australian
Times Advertising

the Coalition's efficiency dividend hike may mean longer wait times and reduced services

  • Written by Andrew Podger, Honorary Professor of Public Policy, Australian National University

On the eve of the election, the Coalition has said it will impose a higher “efficiency dividend” on public service agencies over the next four years in an effort to cut public service spending and address the budget deficit.

An efficiency dividend is a measure, first introduced by Labor in the late 1980s, that reduces the budgets of public sector agencies by a certain percentage.

The current efficiency dividend is 1.5%, but the Coalition has promised to boost the figure to 2% for the next three years, with Treasurer Josh Frydenberg saying:

What we are doing is offsetting that spending with an increase in the efficiency dividend by half a per cent, which will raise more than A$2.3 billion […] The annual departmental bill across the Commonwealth is about $327 billion. What we’re saying is it will be reduced to about $324 billion, as a result of this additional measure.

Across-the-board cuts to the public service via the so-called efficiency dividend represent a blunt instrument to achieve budgetary savings.

They have been used by both sides of politics over the years. They allow politicians to avoid taking responsibility for cuts on the pretence they are only about efficiency and that the public sector agency heads can manage them with no impact on services to the public.

Read more: Elections used to be about costings. Here's what's changed

But many reviews, including by parliamentary committees, have revealed the efficiency dividend often does impact the level and quality of services, particularly for smaller agencies and particularly over time.

It can lead to increased charges, reduced services (for example, the Bureau of Statistics’ Year Book no longer comes out annually) and increased waiting times.

While Labor has strongly criticised the Coalition’s proposed increase in the dividend, its criticism is a little hollow as it has said it will retain it.

Labor is also proposing an additional cut in spending on administrative expenses through cuts to funding of consultants, contractors and labour hire – only some of which will be redirected to new public service positions.

The Thodey report

Of course, taxpayers should expect the public service to pursue efficiencies and increased productivity – administrative expenses should not be automatically increased in line with increases in input costs. In particular, there is scope to use technology better to drive down costs and improve service provision.

But this requires new investments as recommended by an independent review of the Australian public service, led by David Thodey AO.

Following the Thodey report’s release in 2019, the government agreed to an audit of its current IT investments but we are yet to see that audit.

Read more: 'Sports rorts' shows the government misunderstands the public service

Nor has any mention been made of new investments that might deliver the efficiencies the government expects, let alone achieve the improved services Thodey was looking for.

In the absence of a more nuanced and targeted approach to efficiency gains, there a the risk of further reducing the capability of the public service.

It is likely to mean further reducing resources for longer-term research and being less able to enhance public service wages where there is a need to attract key skills (such as in information technology).

A lazy cost-saving measure

While Labor and the unions are highlighting the likely impact on public service numbers, I would be less concerned on that score if the measure was genuinely about efficiency.

The concern I have is that this is not only a lazy cost-saving measure: it also reflects antipathy towards the public service as an institution.

We have seen this before with the imposition of staffing caps, in addition to the caps on administrative expenses. These have forced greater use of consultants and labour hire, even where this is less efficient than using public servants.

And we have seen it in the rejection of key Thodey report recommendations, not only about removing the staffing caps but also about enhancing the role of the public service commissioner. This would have ensured more merit-based senior appointments and a more appropriate way of setting pay and conditions.

Authors: Andrew Podger, Honorary Professor of Public Policy, Australian National University

Read more https://theconversation.com/a-lazy-cost-saving-measure-the-coalitions-efficiency-dividend-hike-may-mean-longer-wait-times-and-reduced-services-183361

Interstate Car Transporter Urges Buyers to Book Early

As the conflict in the Middle East continues to put increasing pressure on local fuel supply, Australian transport companies are experiencing increasi...

Digital Minimalism for Business Owners: Fewer Tools, Better Systems

Be honest. How many apps are open right now? One for scheduling, another for invoices, a third for customer notes, plus a spreadsheet someone email...

The Importance Of Proactive NDIS Renewal Preparation For Sustaining Your Provider Business

Your NDIS renewal notice is not a signal to start preparing. By the time it arrives, preparation should already be well underway. For new providers, s...

Why Fire Extinguisher Testing in Sydney Is Becoming a Records Game, Not Only a Maintenance Job

A fire extinguisher used to feel like one of the simpler parts of building safety. It hung on the wall, wore a service tag, and sat there quietly unle...

The Switchboard Upgrade Question Every Melbourne Renovator Should Ask Before the Walls Close Up

Renovations have a funny way of making people think on surfaces first. Splashback, stone, joinery, tapware, paint. Fair enough too. That is the exciti...

Winter Sanitation Gaps in Parramatta Kitchens: A Hidden Pest Risk

Winter brings a host of changes to our homes, from the chill in the air to the cozy warmth indoors. However, this season also introduces sanitation ch...

When to Seek Advice from Employment Lawyers in Melbourne

Australian employment law is detailed and, at times, complex, with rights and obligations that aren't always obvious to employees or employers witho...

7 Benefits of Professional Gutter Cleaning for Australian Homeowners

Gutters aren't exactly glamorous. They sit up there on the edge of your roof, doing their job quietly - until they stop working. Clogged, overflowing ...

Pipe Floats Strengthening Pipeline Performance In Demanding Environments

Pipelines often travel through environments that are anything but predictable, water currents shift, terrain changes, and materials keep moving unde...

Why Ceiling Fans Are Essential For Comfort, Efficiency, And Modern Living

Creating a comfortable indoor environment is not just about temperature; it is about how air moves, how a room feels, and how efficiently energy is ...

Why Duct Cleaning In Melbourne Is A Smart Investment For Healthier Living Spaces

Behind your walls, ceilings, and vents lies a network quietly working every day to keep your home comfortable. Yet over time, this system can become...

Disability Service Providers Supporting Inclusive And Independent Living

Finding the right support system can feel like assembling a puzzle where every piece must fit just right. For individuals and families navigating di...

A Beginner's Guide to Owning a Caravan in Australia

Owning a caravan opens up a style of travel that's hard to match for freedom and flexibility. However, for those just starting out, the process of c...

Preparing Your Air Conditioner for Summer: What Most Homeowners Overlook

As temperatures rise, many homeowners switch on their air conditioning for the first time in months — only to find it’s not performing the way i...

What Actually Adds Value to Properties in Newcastle

Newcastle has seen steady growth over the past few years, with more buyers looking beyond Sydney for lifestyle, space, and long-term value. As dema...

What is Design and Build in Construction?

Imagine you’re about to start a new construction project, maybe it’s a custom home or a commercial building. You’ve got the idea, the land, an...

Commercial roof leak detection: why early action protects your building

Water ingress is one of the most disruptive and costly issues facing commercial properties. For property managers and facilities teams, even a minor...

Custom Photo Frames: Turning Everyday Moments into Lasting Displays

Photos capture moments, but how you display them determines how they’re experienced every day. A meaningful photograph deserves more than a generi...