Finance Minister Katy Gallagher has signalled $27.9 billion in savings and reprioritisations will headline next week’s federal budget in a bid to show “responsible economic management” in the face of a challenging environment.
Services Australia’s “internal efficiencies” to the tune of $193 million have been identified by the Albanese government’s 2024-25 budget, which will redirect back office functions to support frontline services.
According to the federal government, Services Australia will benefit from the savings to be reinvested in the agency.
A call to hire more ongoing public servants in favour of an outsourcing model will also set up a “dependable, well-trained and efficient workforce”, and cut expensive onboarding costs associated with lower staff turnover.
In a statement on Thursday evening, the minister said other government programs would be subject to reviews or further evaluations before more money was committed.
“Our approach to this budget builds on the responsible approach we have taken in our last two budgets,” Gallagher said.
“That is to reduce gross debt and identify responsible savings to take the pressure off inflation, while also continuing to make the investments Australians expect and clean up the mess left behind by the Coalition.”
Another $3.8 billion of the nearly $28 billion total savings will be attributed to cuts and reprioritisations across all 15 portfolios. A statement from the minister said more detail about these measures would be contained in the budget papers.
A further $1 billion in savings has been earmarked from cut spending on external labour, including consultants and contractors (previously announced on May 5, 2024).
Gallagher said that once the 2024-25 budget was handed down on Tuesday, the Labor would have delivered $77.4 billion in government savings.
“Our budget decisions clearly demonstrate our priorities and present the Opposition with a clear decision to make,” Gallagher said.
“Do they support the Albanese government’s responsible and balanced approach to budgeting or are they going to come clean about what services they plan to cut?,” she asked.
Other savings and reprioritisation projects that will be announced next week include strengthening compliance and occurrence of the child care subsidy program to reinvest $441 million back into the Education portfolio.
Labor is targeting a major reprioritisation of Defence projects to make the largest budget saving ($22.5 billion) as part of the new Defence integrated investment program, which will “accelerate priority capability, reduce over-programming, and deliver an integrated, focused Australian Defence Force.
Gallagher noted that the government’s budget decisions were responsible ones, made amid ‘unavoidable pressures’ facing the economy.
But certain net policy decisions have also been made to address $15.4 billion in unfunded projects and focus on targeted cost of living measures.
According to the minister, this critical spending was part of an ongoing restoration that would take more than a single budget or term of government to fix.
Examples of the budget’s attempts to “clean up the mess inherited from the former [Morrison] government” include what Labor says is unavoidable spending for:
- Extending funding for health programs which was due to expire, including for palliative care, cancer support, public health chronic conditions, and alcohol and other drug treatment services;
- Funding digital capability and sustainment of aged care systems;
- Sustaining myGov operations and continuing to fund staff at Services Australia, the Department of Veterans Affairs and National Emergency Management Agency;
- Continuing veterans’ access to health and support programs;
- Continuing to fund the COVID-19 response, including funding for COVID antivirals, vaccinations, and testing;
- Sustaining water policy functions to improve water security and enable the delivery of the Murray-Darling Basin Plan.
- Boosting baseline funding for the Department of Home Affairs to address historical chronic funding shortfalls; and
- Investing in the fit-out requirements for Western Sydney International Airport.
The finance minister said the $15.4 billion spend on unfunded projects that were priority needs was one of the reasons the budget position was likely to be weaker than MYEFO and was being invested in addition to $21.1 billion Labor had spend on “unavoidable legacy pressures” since it was voted into power.
Next week’s budget decisions were in line with the community’s expectations about what investments were needed to sustain quality service delivery today and into the future, she added.
“Australians expect a responsible government to identify sensible savings to reinvest in higher quality spending and keep existing programs in place to prevent any cuts to the services that Australians rely on,” Gallagher said.
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