The government's pledge to restore confidence in the bureaucracy is under attack as the Coalition embraces the mining magnate's Trumpian vision for deep cuts.
When Bill Shorten took over his sprawling portfolios in government, he saw public servants were "drowning".
"The Quality and Safeguards Commission and Services Australia, morale was in the toilet. They had to go through the trauma of implementing robodebt when a lot of them just knew it was wrong and misfiring," the minister for government services and the National Disability Insurance Scheme tells The Saturday Paper.
"They'd been promised that their productivity and work quality would improve because of marvellous Coalition investments in digital tech - some of which we had to junk, hundreds of millions of dollars.
"So, their numbers were cut. The digital nirvana had not materialised and they were dealing, in many cases, with just angry people all the time. Morale was very poor."
A pitched battle, egged on by Australia's richest person, Gina Rinehart, is now under way over the efficiency of government. The Coalition is targeting what it calls wasteful spending on public servants in the midst of a cost-of-living crisis, while the government insists it is running a leaner - by $4 billion - and less mean bureaucracy.
Having made the "Canberra bureaucracy" a key target of its "No" campaign in the referendum on the Indigenous Voice to Parliament, and emboldened by Donald Trump's imminent return to the White House, the Coalition has been talking up plans to take an axe to the public service.
"The first thing we'll do is sack those 36,000 public servants in Canberra, that's $24 billion worth," Nationals leader David Littleproud told commercial radio station Triple M in August.
"You've got to ask yourself: do we need 36,000 more public servants?" Opposition Leader Peter Dutton said at the Minerals Council of Australia annual conference in September.
Now the opposition is urged to look to the United States and consider even deeper cuts. Gina Rinehart, having revelled in the "drill, baby, drill" energy of Trump's election night at Mar-a-Lago, is now agitating for a department of government efficiency - the cost-cutting department that will be co-led by tech billionaire Elon Musk - in Canberra.
"We need a USA-style DOGE that delivers action, one that helps to return dollars to our pockets and investment back to Australia," she said at an event hosted by resources giant Santos on November 22.
The Saturday Paper received no response from Coalition members as to which departments or services would be subject to cuts, nor whether they plan to fill any service gap with consultants.
Katy Gallagher is accusing the opposition of not being up-front with its plans.
"They play this silly game where they think by artificially constraining the public service size, you can then deliver on what you want. And I just don't accept that … I think most reasonable people don't accept that," the minister for the public service tells The Saturday Paper.
"I think they expect us to be frugal. They expect us to put screws on. And every ASL [average staffing level] request that's asked for, we have to kind of ask, 'Is this needed?' You know, make the departments run through hoops for it. Which we do through the ERC [expenditure review committee], but at the end of the day, we also want the job done.
"And we want people in Services Australia. We want MyGov to function, for goodness sake. That wasn't even funded."
Shorten, who will leave politics in February to become the vice-chancellor of the University of Canberra, says the public service is a far leaner operation now and investment in it is about not losing know-how to the private sector.
"All our metrics on complaints in Services Australia are falling," he says. "All of the waiting times and the numbers we're processing have got better."
For the Coalition, the focus is on spending cuts as part of their strategy to ease inflation. The proposed spending targets are largely undefined, but that 36,000 number - total public servants added since Labor came to power, and about 20 per cent of the public service workforce - keeps coming up as a target for cuts.
"We learn, in the numbers that came forward in the last week or so, that that's costing Australian taxpayers an additional $5 billion a year … And we know their plan is to continue to bloat the public service here in Canberra," shadow treasurer Angus Taylor told parliament on November 20.
"We've been making the tough calls in the parliament. It's important that you do that when you face a cost-of-living crisis. It's important that you do that when inflation is raging."
Cost-cutting, focused particularly on bureaucracy, would enable tax cuts, according to Rinehart, a generous donor to the Coalition. At the Santos event, for the benefit of "timid" LINOs - so-called Liberals in name only - Rinehart said that public servants don't vote for the Coalition, and "we need to make Australia great again. Don't we!"
"We all know what happens when government tape and tax is cut, but strangely that Canberra cocoon doesn't. Please remind them, often," Rinehart said.
Former senior public servant Paddy Gourley says the sector is easy to demonise.
"That old thing about how the public sector really is lead in the saddlebags of the economy … that we've essentially got to rely upon the private sector - the old Reagan thing about how the public government is not the solution, it's the problem - all that sort of thinking is just perverse," he says.
"It seems to me that it's very easy, in some of this sort of discussion, to play to an individual's worst instincts. Trying to convince people that having a healthy public service is a good thing is much more difficult than carrying on about how the public service is a waste of time and a drain on your resources and a drag on the economy … full of cardigan-wearing bludgers and all of that."
Public servants are not statistics, Shorten says, they represent real services.
"Actually, a public servant is you … It's you when you've got a disability. It's you when you're a veteran. It's you when you've got an age pension. You're trying to sort out the age pension set for your package for your parents. It's you when you're trying to get your kid on to the NDIS."
In his first press conference as prime minister, Anthony Albanese promised to value and restore respect for the public service, amid concerns that it had been hollowed out for years by increased reliance on consultants.
Gallagher says spending on consultants and contractors has been cut by $4 billion over Labor's term. Costs of outsourcing to the Big Four consulting firms and Accenture fell in 2023-24, she says, to $1.5 billion from $2.4 billion in 2021-22.
But she admits there have also been additional resources deployed in "policy priority areas" in the public service.
One she cites is the re-creation of the climate change portfolio, within what is now the Department of Climate Change, Energy, the Environment and Water. It has 2700 employees.
Consultants have also been deployed in resourcing the Department of Veterans' Affairs (DVA) to assess veterans' entitlements.
As to what she expects would go under a Coalition government, Gallagher says climate will be one of the portfolios to suffer. "I think they will abolish functions. And that won't be any surprise," the minister says. "They don't believe in climate change, and they didn't have a department of climate change."
"When we've looked at their 36,000 job cuts, that's essentially a 20 per cent cut to the public service, so if you put that across Services Australia or DVA or the ATO or NDIA, that's where the majority of the jobs would be.
"It would mean 4000 jobs out of Defence. And that gets trickier for them. Are they really going to cut 4000 jobs out of Defence? Or are they going to double the job cuts in Services Australia? Because you can't cut that many. Three quarters of those jobs are outside of Canberra."
For Shorten, it is a simpler argument.
"When they won't tell you what they're going to do and they've got a number, you've got to say everything's on the chopping block," he says.
"This nebulous 'we'll get rid of 36,000 people', it's just going to be paid for in contractors."
The shadow minister for the public service, Jane Hume, is disputing the savings highlighted by the government and appears to be preparing a case for expanding outsourcing. "Trading expertise in the private sector for full-time public servants can be a false efficiency," she tells The Saturday Paper.
"The Commonwealth can't do everything on its own - that's just a fact. There will always be a need for our public service to access relevant skills and expertise temporarily or on a project basis, and the private sector may be the most cost-effective place to access that capability or expertise.
"It is not the case that the appropriate use of contractors and consultants increases government expenditure. Under the former Coalition government, the departmental funding provided to administer government services declined as an overall share of total government expenses."
Labor is about to undertake a second public service audit. The first, conducted soon after the election, found the Morrison government spent $20.8 billion on a shadow workforce of almost 54,000 contractors and external providers. They plugged gaps in service delivery created by a cap on the number of government employees. That took the official APS headcount to almost 200,000, a 37 per cent increase on the 144,300 staff in the Commonwealth bureaucracy in 2021/22.
"We were paying a premium to the labour hire companies to arrange to employ them under labour hire arrangements," Gallagher says.
In his portfolio, which includes Services Australia, Shorten has overseen a reduction of $700 million in annual savings for the 2023/24 financial year by paring back on contractors and consultants. Four years ago, spending on contractors and other outsourced work was $1.3 billion under the Morrison government.
However, according to Paddy Gourley, Labor has missed opportunities to offer public servants better workplace protections.
He questions the constitutionality of hiring contractors, a practice he sees as corrupting the staffing system and doing damage to the long-term capacity of the public service.
"I think that a lot has been lost. If you look at the Department of Home Affairs and Stephanie Foster is trying to do her best to retrieve what you might roughly call the Pezzullo legacy … " he tells The Saturday Paper.
"So, she's going through now and trying to reassess the structure and levels that she needs in senior management decisions in her department. What's she done? She's got in a blasted private sector consultant to help her!
"A lot of places you look, you can see this lack of capacity lurking not very far below the surface."
Gourley says the Albanese government could have strengthened the Public Service Act to discourage the use of contractors and consultants. He says administrative guidance for public sector employment can be "torn up at a whim".
Gallagher says flexibility is needed within the public service, so that is not something the government is currently pursuing. She says, however, the foundations for a stronger public service are now in place, including a resolved enterprise bargaining agreement and better conditions to attract and retain staff.
"We've got good senior leadership in place. The Public Service Commission is kind of back in the centre of things. We're being more accountable, more transparent."
Gallagher says pay disparity is still being tackled, among other challenges. "There is much more to be done, and it will take longer than two-and-a-half years."
Independent ACT Senator David Pocock accepts the service can't be turned around overnight. He would like to see whistleblower reform and more accountability among senior bureaucrats, especially in the wake of the robodebt scandal.
"I think we've seen big systemic issues around culture and under-performance, and there doesn't seem to be a lot of accountability for the top," he tells The Saturday Paper. "Down the bottom, you're churning, working, working your arse off, and the top turn up to [Senate] estimates and sort of deflect and try and point to someone else.
"We should both protect it and expect more of it."
