Finance and Public Service Minister Katy Gallagher has refused to guarantee there will be no job cuts within the Australian Public Service, as government departments come under pressure to slash spending and operate within tighter budgets.
Agencies ordered to identify savings
The push follows a directive from Senator Gallagher's own department, which has instructed agency heads to pinpoint their 5 per cent lowest-priority expenditure. This cost-cutting exercise, first revealed by the Australian Financial Review, is part of a broader drive for fiscal discipline ahead of next year's federal budget.
While the Albanese government anticipates the overall size of the APS will stay "largely the same", Senator Gallagher has explicitly left the possibility open for staffing numbers to fall in certain agencies. This could occur if departments choose not to refill vacant positions as they grapple with financial constraints.
MYEFO reveals spike in separation costs
New data from the Mid-Year Economic and Fiscal Outlook (MYEFO), released recently, underscores the mounting pressure. The figures show a significant forecast increase in spending on separations and redundancies across the public service.
For the 2025-26 financial year, these costs are projected to be 28 per cent higher than forecast in the March budget. The following year, 2026-27, sees an even steeper rise of 31 per cent above previous estimates.
When questioned on whether this exodus of bureaucrats would shrink the public service and if she could rule out a reduction in Average Staffing Levels (ASL), Senator Gallagher offered a nuanced response. "I've said a number of times I think the APS is largely the right size ... but that's not to say every agency remains the same," she stated.
Growth in security, cuts elsewhere
The Minister indicated that while some areas, notably defence and national security, are expected to grow their workforce, other agencies may see reductions. She described the government's approach as managing "ons and offs in different areas," following a period of significant expansion under Labor.
The March federal budget recorded the APS headcount at 213,349, reflecting an addition of approximately 41,000 public servants since the party won government in 2022. MYEFO does not provide an updated total figure.
Senator Gallagher has defended the savings directive as essential "fiscal discipline," while simultaneously insisting that job losses are not the intended outcome. "We need to ensure that we've got resources available to meet all of the pressures that are coming the way of the public service," she told the Senate recently.
However, she has declined to table the Finance Department's letters to agency heads in the Senate, citing that they relate to cabinet deliberations. This move came despite an order for the production of documents, adding a layer of political contention to the government's internal cost-cutting measures.
