Australia’s Finance Minister Katy Gallagher has revealed an additional $2.1 billion in savings ahead of the 2025 federal budget, part of Labor’s ongoing efforts to overhaul public service spending and repair the nation’s budget. The latest round of “reprioritised” spending brings the total value of savings and shifted funding to nearly $95 billion under the current government’s term.
The savings are part of a three-year initiative by the Albanese government to trim non-essential spending and reallocate funds to support its key policy objectives. The $720 million cut in expenditure on consultants, contractors, and labor hire is particularly noteworthy, reflecting Labor’s broader strategy to rebuild the capacity of the public service and reduce reliance on external labor. Since 2022, the government has saved a total of $4.7 billion by winding back the use of external labor, a move that is central to the government’s approach of reducing unnecessary costs in the public sector.
However, Gallagher’s office did not provide specifics on where the remaining $1.4 billion in this year’s savings would come from. The new figures contrast Labor’s focus on fiscal responsibility with the opposition’s proposals, which include public service cuts and a push for a return-to-office mandate if the Coalition wins the upcoming election.
“The choice for Australians is clear – a Labor government focused on repairing the budget to fund priorities, versus a Coalition intent on cutting frontline services to pay for their $600 billion nuclear project,” Gallagher said, underscoring the political divide between the two parties on public service funding.
The Coalition, under leader Peter Dutton, has repeatedly criticized the Albanese government’s creation of 36,000 new public service positions, arguing that these roles have not translated into improved public services. Shadow Finance Minister Jane Hume, in an interview on Sunday, indicated that a potential Dutton government would seek to reduce the size of the public service to pre-2022 levels, despite promises to protect frontline workers. Hume also expressed concerns over the efficiency of the expanded public service, arguing that while the workforce has grown, the quality of services provided to the public has not correspondingly improved.
Meanwhile, Shadow Treasurer Angus Taylor refrained from commenting on whether the Coalition would once again turn to private consultants to fill gaps in the public service, a move that raises questions given the Morrison government’s substantial spending on consultants in its final year. A 2023 audit revealed that the Morrison government had spent $20.8 billion on consultants, equivalent to employing 54,000 full-time workers.
The Labor government has also ramped up its critique of the Coalition’s plans to bring public servants back to the office, publishing analysis suggesting that the policy could cost workers up to an additional $5,000 annually in transport and parking fees. Prime Minister Anthony Albanese defended remote working, emphasizing the advantages it offers, particularly in reducing commuting time and overcoming geographic barriers.
The Australian Council of Trade Unions (ACTU) is set to echo Labor’s concerns, claiming that a return-to-office mandate would negatively impact one in three Australian workers. ACTU President Michele O’Neil warned that such a policy would be a “productivity killer” and disproportionately affect women, who have benefitted from flexible working arrangements. “Forcing hundreds of thousands of workers back into the office means more time spent in traffic and less time with family,” she said. “Flexible work has been crucial in increasing women’s participation in the workforce, with one million women joining the workforce in the last four years.”
As the debate heats up ahead of the election, the government’s fiscal management and policies on public service reform will be key issues for voters in 2025.
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