Implementation of departmental savings and efficiencies

Why this is important

In the 2023–24 state Budget, departments and agencies were allocated $2.1 billion in savings over 4 years. According to the Budget Papers, these savings are to be achieved through efficiencies in corporate and back-office functions and reductions in expenditure on labour hire and consultants and are not intended to impact frontline workers and service delivery.

The quantum of these savings is significant, with an expected reduction of 3,000 to 4,000 public service positions. This is an estimated 5 to 7 per cent of the Victorian Public Service.

The government indicated that departmental secretaries will be responsible for determining how the savings will be achieved by their organisations. This approach can lead to a lack of transparency regarding the decisions taken by agencies.

Given the scale of savings to be achieved it is important that changes are implemented in a way that minimises disruption to agencies and avoids unintended consequences to the community.

What we plan to examine

We plan to examine whether departments and agencies implemented the savings and efficiencies, outlined in the COVID Debt Repayment Plan – savings and efficiencies initiative in the 2023–24 Budget Paper No. 3: Service Delivery, in a way that protected frontline staff and maintained service delivery.

Who we plan to examine

All departments.

Further information

The Auditor-General’s Report on the Annual Financial Report of the State of Victoria: 2022–23 identified employee cost growth as a key financial risk to the general government sector, with the government forecasts predicting that employee costs will grow by 13.8 per cent over the next 4 years ($38.3 billion in 2026–27). If targeted cost-savings initiatives through staff reductions are not implemented and realised as planned, the actual employee cost may be greater than forecast.