The public servant job cuts were never 'secret'

Oh dear. Even as Kevin Rudd departs he is managing to swing like a wrecking ball across the parliament. However, this time he's wrecked the Coalition's fiscal policy.

The major mistake in the Abbott ascendency, it seems, was for the Coalition to literally believe its own slogans – particularly those that included the phrase "the worst government ever".

As Business Spectator pointed out back in March, that phrase was always at the end of the hyperbole scale marked "bunkum" (see: The worst government ever? Not yet, March 19).

Labor made many mistakes (also listed in the above article), but the pace of its fiscal consolidation – on the expenditure side – was not one of them. Department heads at the time were moaning about the cuts Labor was imposing on them, well before Abbot said he would cut 12,000 public servants.

So how did this story become 'Labor's secret job cuts’?

Even at the lower figure of a 2 per cent 'efficiency dividend' cut from each department each year, over four years Labor was planning to cut the federal public servant head count from around 170,000 to 156,800 – and was facing fierce resistance from department heads, according to one former cabinet minister today.

If one had no inkling of how the public service works, it might be possible to argue that this compounding 2 per cent cut across the four years would be achieved via building closures, less stationery, fewer fleet vehicles or perhaps a clamp-down on cream biscuits. However, in the real world, it had to be job cuts – albeit by the process of ‘natural attrition’. That's what departmental heads were complaining of – and Labor's real sin in this area is not budgeting for more redundancies. It provided for only 860, knowing full well that thousands of packages would be needed. 

That's a 'secret' that was in the budget papers. And even without factoring in the 2.5 per cent dividend that had department heads almost at the point of mutiny, it would have come to 13,200 job cuts.

But Australian voters weren't told before the election. And why? For one thing, Kevin Rudd and then-Treasurer Chris Bowen were badly caught out in August for claiming that Treasury and Department of Finance briefings had revealed to them a "$10 billion fraud" on the Australian people.

When Treasury secretary Martin Parkinson and Finance secretary David Tune held their own media conference to tell voters that just wasn't true, Rudd and Bowen "were sent to the sin bin" by journalists, according to the former cabinet minister who spoke to Business Spectator.

From there, they could say what they liked about Abbott's promised public service job cuts – and nobody in the press gallery would listen.

But that part of their campaign was true – they knew there were thousands of job cuts built into the fiscal consolidation program that Labor began at the 2009 budget. And they knew that adding 12,000 more to those cuts would be literally "cutting to the bone".

But would journalists and voters listen? Not after that major gaffe. And so "secret" they remained.

Tony Abbott, Joe Hockey and others seem to have become so convinced that Labor's problems were on the expenditure side, rather than the revenue side, that they apparently didn't think to check what a 2 per cent per year reduction in the public service would add up to.

Had they fired up the Coalition calculator, one of their best election slogans – "end the waste" – would have been neutralised.

Yes, Australian voters were conned by the 12,000 figure – if it were added to the plans in the budget to cut more than 13,000, it would have been utterly unachievable.

But thanks to the distraction of Kevin Rudd's campaign gaffe, it is now Finance Minister Mathias Cormann and Treasurer Joe Hockey who have to explain why they failed to see these public service cuts in the budget. 

Those jobs cuts were never secret.