How Dutton will cut Defence, Home Affairs to fund tax cuts for rich

Peter Dutton has got his media cheerleaders, and even determined gallery fence-sitters, excited by the idea he will go to the next election with a tax reform plan. Perhaps it’s a sign of the sheer desperation brought about by the most recent bout of taxreformitis, but a few vague words by the opposition leader have been sufficient to elevate him as the new champion of fiscal change — without, of course, too many questions about what his plans will involve or cost.

One can imagine a similar mid-term commitment by a Labor opposition to come up with a tax reform package would already have been seen as a concerted campaign for it to rule out death duties, tax the family home, double the GST, make boomers pay even a slightly more equitable tax contribution and other outrages. That’s just the usual double standards of political coverage though.

The only actual thing that Dutton has said he’ll be doing is keeping Labor’s amendments to the stage three tax cuts — the amendments the Coalition was promising to roll back when Labor announced them — and give high earners back the tax cuts that have been taken from them.

So in the spirit of demanding how such a commitment would be paid for if Labor had made a similar promise, how will Dutton afford this? What other taxes will rise, or spending will be cut, to fund tax cuts for high-income earners — or will it just go on the budget deficit, like previous Coalition-era tax cuts were put on the national credit card?

To Dutton’s credit, he’s already said where the money will be coming from, kinda. At a media conference on Tuesday — and not in response to a direct question about how he’ll fund his tax cuts — Dutton offered:

You need to find about $9 billion a year, which is no easy task. There are savings that we can identify from government waste. In administered programs, for example, leaving the program funding intact to one side, the government’s spending about $92 billion a year. They’ve increased by 10,000 the number of public servants here in Canberra. There are ways in which you can provide some savings, and that’s work that we need to continue.

Now, every politician promises to find public service savings. There are ancient Greek inscriptions in which Athenian rulers promise to fund wars against Sparta by cutting their predecessors’ waste and mismanagement. But Dutton is correct that the Australian Public Service payroll has increased by around 10,000 under Labor. According to the most recent “State of the Service” report, between June 2022 and June 2023, the APS payroll increased from just under 141,000 people to 151,000 people — plus an increase of about 800 non-ongoing staff as well. The Coalition had gotten public service numbers down to just above 130,000 during the pandemic.

Plenty of room for savings from such bloating, eh?

Except, Labor has bulked up the APS to slash the Coalition’s truly remarkable consultancy bill. According to the auditor-general, the Coalition doubled spending on consultants from $444 million in 2014 to $888 million in 2022. Finance Minister Katy Gallagher says the Coalition had a “shadow workforce” of 53,000 people. The government “is saving $810 million over four years” by converting contractor jobs to permanent jobs, she told Crikey.

But let’s give Dutton the benefit of the doubt and accept he’ll find the bulk of his $9 billion a year by cutting back the public service again and doing so without doubling consultancy spending. Where will the jobs come from?

From Defence and Home Affairs, it turns out.

According to the Public Service Commission, the two departments responsible for the biggest increases in APS headcount since Labor was elected are Defence, which added 1,431 permanent staff in 2022-23, and Home Affairs, which added 1,086 staff, plus nearly 300 non-ongoing staff. That’s 2,800 of the 10,000 right there. Throw in Veterans’ Affairs, where the government has been trying to rectify some of the disastrous treatment of our veterans that has marked that portfolio, and it’s another 700.

So Dutton is really saying he’ll be targeting his two former departments for massive job cuts. One of them is now in charge of the biggest single defence boondoggle in our history in AUKUS — one vigorously supported by Dutton — and the other needs fundamental reform and better resourcing because of spectacular failures of visa processing and border control on Dutton’s watch when he was minister there.

Rarely have clichéd promises to find savings come dripping with so much irony.

It’s Dutton himself who’s said he’ll do this. He knows he has to find savings. He says they’ll come from reducing the APS headcount. The APS headcount has expanded most in Defence and Home Affairs. Let’s see if the mainstream media probe him on it.

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