James Whelan | Hard to Know Where the Axe Will Fall

The public service is a political victim in an economic debate obsessed with racing to a surplus. When Wayne Swan delivered his mini-budget last week, he announced a further 2.5% in cuts to the public sector without any evidence of the impact. At CPD we step to tell our politicians why they must put their axes down, revealing the consequences of the continual squeeze placed on our public services by the 'efficiency dividend'. In uncertain economic times we need a capable public service more than ever.

Governments use the efficiency dividend to cut spending while avoiding political pain writes CPD's James Whelan in The Australian Financial Review. As the Research Director of our Public Services program, James added a voice of reason to an otherwise largely one-sided and evidence-free debate:

 "The efficiency dividend is not an intelligent or evidence-based strategy to motivate innovation, economy and creativity but a blunt instrument that can reduce or compromise the work of public sector agencies. Government reviews of the mechanism in 1994 and 2008 found that it places significant stresses on agencies and recommended that alternative measures be investigated. After over 20 years of being asked to cut an arbitrary percentage of their budgets, few agencies have room for further 'savings' without reducing their core functions"….

If the rollercoaster trend in public service firing and rehiring in the last two decades is repeated, the short-term cost savings will prove costly in the longer term….

The fact is that governments use the efficiency dividend not to increase efficiency but to cut spending while avoiding the political pain of spelling out what those cuts will mean for people who rely on public services. We need strong and capable public services to build Australia's resilience in times of global uncertainty. Instead, Australia's major parties are locked in a race to the bottom."

Read the entire article in The Australian Financial Review, page 63 on 1 December, 2011.