What happened to the meat axe?

Remember when Kevin Rudd said he was ''dead serious'' about bringing back the razor gang to trim the public service?

Two days before the 2007 federal election Rudd said it struck him as ''passing strange that this government that supposedly belongs to the conservative side of politics has not systematically applied the meat axe to its own administrative bloating for the better part of a decade''.

Unfortunately, in the intervening period the only axe wielded in Canberra seems to have been the one used to cut down Rudd and even he has only shifted from one job to another.

In fact, according to the Australian Public Service Commission the number of commonwealth employees rose from 155,421 people in 2007, the last year of the Howard government, to 164,596 last year, an increase of 6 per cent during the period.

And while the share of the 10 largest agencies, including the Australian Taxation Office, Centrelink and Defence, has fallen by roughly 2 per cent from 2008 to 2010 it has been more than compensated by growth in areas in which the commonwealth previously had a lesser role.  The Department of Climate Change, for example, has grown precipitously from 246 staff in 2008 to 1019 last year even though they are largely waiting in abeyance for a carbon tax to be implemented.

And the central agencies that are tasked to bring others to heel on the cost front are finding it difficult to keep a lid on their own hiring.  Staff numbers in the departments of Prime Minister and Cabinet, Treasury and Finance have grown by 15 per cent from 3170 to 3654 in last year.

If Rudd still has a meat axe he hasn't wielded it at AusAID, where there has been a 20 per cent increase in staff from 863 to 1037, and DFAT staff numbers have jumped from 2782 to 3160.  Such is the price of placating an aggrieved ex-prime minister.

Federal health public servants have fallen slightly from 5470 in 2008 to 5232 last year, but not for long.  Labor's health plans, including a national preventative health agency with funding of $872 million over six years, will increase the number of federal health bureaucrats that consume our health budget without providing any medical services.

In Education and Workplace Relations, 6054 staff somehow fill their days even though public education is a state responsibility and private education is, by definition, not run by the government, while the workplace relations arm delves into every nook and cranny of employer-employee relations throughout the country.

The Defence Department employs 15,691 public servants.  Not soldiers, sailors and the like;  this is an army of pen pushers.

What do all these thousands of public servants do?  They develop policies, advise government, manage the media, administer regulations, redistribute funds, monitor state governments in line with intergovernmental agreements, and at least 23 per cent of them deliver no front-line public service of any kind.

Julia Gillard and senior ministers have warned Australians of a horror 2011-12 budget, and to prove their point they are trialling selective spending reduction options in the court of wider public opinion.

Yet the debate over items such as medical research cuts, which would shave only 0.08 per cent off total spending, is little more than a diversionary political exercise when there are much larger sources of expenditure to prune back.

But the big question is whether the government has the constitution to cut back the size of the public service when that could incur the wrath of public sector unions and reverse its own legacy of big spending.

According to Lenore Taylor and David Uren in their book, Shitstorm:  Inside Labor's Darkest Days, in 2008-09 the Rudd government spent an unprecedented $80 billion over the forward estimates.

In that year federal government payments blew out to $316bn, an increase of $44.2bn on the previous year.  This included the extra public servants to oversee the anti-GFC efforts, as well as fulfilling the 2007 election promises.  Adjusted for inflation, this spending outcome was equivalent to a staggering 13 per cent, exceeded only by Gough Whitlam's 1974-75 budget, which raised spending by 20 per cent.

Any illusions that the government would maintain a fiscally conservative stance, as Rudd promised, were greatly diminished as a result of its big spending venture.

The great irony is that now Treasurer Wayne Swan and Finance Minister Penny Wong must reverse fiscal damage largely of their own making if they want to craft a new reputation for being ''downside Keynesians''.

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