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Driving efficiency savings within Government

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PW 253/11 29 November 2011


The Gillard Government will introduce a one-off increase to the efficiency dividend, to ensure government delivers better value for taxpayers.

For the next financial year, an additional 2.5 per cent efficiency dividend will apply. This will be on top of the existing efficiency dividend of 1.5 per cent. This measure will result in savings of $1.5 billion over the forward estimates.

In difficult economic conditions, which have seen global economic turbulence wipe an extra $20 billion from government revenues, the Government is determined to contribute to the savings task. Given the tight fiscal conditions and future budget pressures, it’s increasingly important that the public service continues to play its part.

This is one measure contributing to savings across Government in the 2011-12 MYEFO of $11.5 billion. These savings will deliver a net improvement to the budget bottom line of $6.8 billion over the forward estimates.

The savings in MYEFO come from a mix of spending cuts, deferrals of commitments and measures to improve the fairness and integrity of the tax system. This mix is appropriate for our current economic circumstances, striking the right balance between strong fiscal discipline and continuing to support job creation and growth.

Next year’s one-off increase in the efficiency dividend of 2.5 per cent will ensure the government pursues smarter and more efficient ways of conducting its core business.

The Government has tasked the Department of Finance and Deregulation with strengthening efforts across all departments to drive efficiency savings. Finance has prioritised the establishment of a dedicated unit - the Efficiency Improvement Branch - to assist in that role.

The Government expects agencies to find savings in a range of areas including: Reductions in the use of consultants and contractors; Replacing domestic and international travel with the use of the Government’s virtual meeting (telepresence) facilities; Reductions in agency spend on hospitality and entertainment; Minimising media and advertising expenditure;

Reductions in printing and publication expenditure; More efficient and consistent delivery of training.

We recognise smaller agencies, the CPSU and our ACT members have had concerns about how efficiency dividend measures impact on core operations of agencies such as our cultural institutions and the courts.

A small number of agencies will be exempt from the one-off increase in the efficiency dividend, following these consultations (list attached).

The Government’s strong expectation is that agencies will continue to meet the efficiency dividend without resorting to forced redundancies, or reduced services to regional Australia. We will require agencies to report on their efficiency measures.

A working group involving the Community and Public Sector Union, Australian Public Service Commission, Department of Prime Minister and Cabinet and the Department of Finance and Deregulation will advise on the implementation of this measure and wider public sector reforms including Senior Executive Service reforms. The group will be led by the Special Minister of State Gary Gray and report to Senator Wong.

This Government has a strong track record of identifying efficiency reforms, making responsible savings decisions. Since coming to Government, we have delivered government efficiency reforms of over $10 billion.

These include:

New travel arrangements for the Australian Government will deliver savings of $160 million from 2010-11 to 2013-14. New Stationery and Office Supplies arrangements are expected to save approximately $4 million in 2012-13. New guidelines leading to a reduction in recruitment advertising expenditure from

$44 million in 2007-08 to $14.8 million in 2010-11. Government advertising being halved, from over $250 million at the end of the Howard Government era to $112 million in the 2010 calendar year. Increased efficiency in the management of Commonwealth Property to return an

estimated $1.2 billion to the budget from 2010-11 to 2030-31. The ICT Reform Program has reduced business as usual ICT expenditure across some 50 agencies by more than $1 billion from 2009-10 through 2012-13.

The efficiency dividend will return to 1.25 per cent in 2013-14 and 2014-15.

Media Contact: Laura Anderson 0411 143 111

ATTACHMENT: Agencies exempt from additional 2.5% efficiency dividend

Courts and tribunals

Family Court (AG) Federal Court (AG) Federal Magistrates Court (AG) High Court (AG) Administrative Appeals Tribunal (AG) Social Security Appeals Tribunal (FaHCSIA) National Native Title Tribunal (AG) Migration Review Tribunal - Refugee Review Tribunal (DIAC)

Cultural Institutions

Australian National Maritime Museum (PM&C) National Gallery of Australia (PM&C) National Museum of Australia (PM&C) National Library of Australia (PM&C) Australia Council (PM&C) Australian Film Television and Radio School (PM&C) Australian Sports Commission (PM&C) National Film and Sound Archive (PM&C) National Archives (PM&C) Old Parliament House (PM&C) Screen Australia (PM&C) Australian Institute of Aboriginal and Torres Strait Island Studies (DIISR) Australian War Memorial (DVA)

ATSI Organisations

Torres Strait Regional Authority (FaHCSIA) Aboriginal Hostels Limited (FaHCSIA) Indigenous Business Australia (FaHCSIA) Indigenous Land Corporation (FaHCSIA)


Australian Communications and Media Authority (DBCDE)