Nearly 40 years of efficiency dividends, and what have we got to show for it?
The size of the public service has been one of the sharper issues in this election campaign. But so far, the debate has been about “cuts” or “no cuts”, “working from home” or “back to the office you go”.
The Coalition doggedly promised to cut 41,000 public servants in Canberra. Public service minister and Labor’s ACT Senate candidate Katy Gallagher said the number of public servants was “about right”, but as the ABC pointed out, she “did not rule out cuts altogether”.
Her exact words were: “there may be some changes across departments and agencies as programs finish and other priorities ramp up”.
There’s an obvious question here: if there’s still room for greater efficiency in the public service, what good does the annual efficiency dividend on the public service do?
The efficiency dividend was brought in by the Hawke Government in 1987. It forces government departments and agencies to find enough savings and efficiencies in their operations to accommodate a 1% cut in their budget each year.
It’s been around for nearly forty years now, and governments dial it up or down depending on whether they think there’s political advantage in it. But whichever way you look at it, they haven’t worked as intended.
As the Secretary of the Department of the Prime Minister & Cabinet Glynn Davis remarked a few years ago, the efficiency dividend puts a handbrake on the public service’s capacity to learn from the past and rebuild after crises.
Many smaller agencies, including Canberra’s cultural institutions, are barely able to function anymore without emergency funding top-ups to mitigate the effects of the efficiency dividend on their budget. Their job is to grow and collect, while also cutting their operational costs each year. That’s a pretty difficult balancing act for anybody to manage.
Efficiency dividends are supposed to make the public service more streamlined and responsive to the needs of the public. It hasn’t worked as intended. Some agencies benefit from the benevolence of governments who want to make a show of their priorities, while the smallest agencies on the frontlines of public engagement tend to suffer from ministerial diffidence.
Independent ACT Senator David Pocock has been a critic of unfair efficiency dividends in the recent past. The minister may be unmoved by arguments about public service capacity and institutional fairness, but surely the politics are obvious.
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