Read The Times Australia

Daily Bulletin

'A lazy cost-saving measure': 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

Business News

The strategic rise of Bali as Australia’s next essential healthcare support hub

As Australian healthcare providers grapple with unprecedented operational bottlenecks, a new nearshore model is quietly transforming patient care delivery. Forward-thinking organisations,  including...

Daily Bulletin - avatar Daily Bulletin

Cost Savings and Benefits of Using Used Pallets in Logistics

In today’s competitive logistics and supply chain industry, businesses are constantly looking for ways to reduce operational costs without compromising efficiency and reliability. One of the most prac...

Daily Bulletin - avatar Daily Bulletin

How Fulfilment Services in Australia Help Businesses Scale Efficiently

The growth of e-commerce and modern retail has transformed customer expectations. Consumers now expect fast shipping, accurate order processing, and seamless delivery experiences regardless of where...

Daily Bulletin - avatar Daily Bulletin

Practical Ways Australian Workplaces Can Reduce Operating Costs

Reducing business costs doesn’t always mean cutting staff, shrinking services or making the workplace feel bare-bones. In many cases, the smarter savings are hiding in everyday operations: the light...

Daily Bulletin - avatar Daily Bulletin

Executive Recruitment Solutions That Help Organisations Secure Exceptional Leaders

Leadership has a direct impact on organisational performance, employee engagement, strategic growth, and long-term success. Businesses operating in increasingly competitive environments require experi...

Daily Bulletin - avatar Daily Bulletin

Why A WooCommerce Website Designer Matters For Online Growth

Running an online store today requires more than simply listing products and waiting for customers to arrive. Businesses need a website that is fast, reliable, easy to navigate, and designed to suppor...

Daily Bulletin - avatar Daily Bulletin

Turning Your Empty Tables into Revenue

The rise of AI demand tools in hospitality, the EatClub–CommBank partnership, and seven trends reshaping Australian dining  A growing number of Australian venues are turning to AI-powered demand mana...

Daily Bulletin - avatar Daily Bulletin

High-Impact Dental Marketing Strategies That Are Driving Real Practice Growth Today

The landscape of dental practice growth in Australia has shifted dramatically over recent years. Standard, broad-spectrum advertising campaigns no longer yield the return on investment they once did. ...

Daily Bulletin - avatar Daily Bulletin

How Telematics Helps Australian Companies Improve Productivity

Operating a commercial fleet in Australia is a uniquely demanding endeavour. Between the sprawling urban sprawl of cities like Sydney and Melbourne and the immense, unforgiving stretches of the Outb...

Daily Bulletin - avatar Daily Bulletin

The Daily Magazine

Lighting Shop in Perth: How The Right Lighting Can Transform Your Home And Business

The right lighting can completely change the look, feel, and functionality of any space. Whether it ...

Traffic Light System Solutions For Safer And More Efficient Traffic Management

Modern cities and growing communities rely heavily on effective traffic management to ensure safety...

Gold Migration Lawyers in Liquidation: How the Closure Affects Your ART Appeal

If your appeal was with Gold Migration Lawyers, a recent change to how the Tribunal decides cases ...

The pressure cooker: life in urban Australia in 2026

Australian cities have always been demanding. Long commutes, rising housing costs, busy schedules a...

What Actually Makes a Good Criminal Lawyer in Melbourne

Most people only think about this question once. That is usually too late. Most people charged wi...

Why Working With A Chatswood Tutor Can Improve Academic Performance

Academic expectations continue increasing for students across primary school, high school, and senio...

Is It Worth Getting Solar Panels in Melbourne?

The real question is not whether solar works in Melbourne. It works. The question is what it is co...

How A Diploma Of Project Management Builds Practical Skills For Modern Work Environments

Developing the ability to plan, execute, and deliver outcomes efficiently is a key requirement in to...

How to Choose the Right Football for Every Level

Choosing a football may seem straightforward, but the right option depends on who will be using it a...