Smaller Government Agenda: Parliamentary Library's Budget brief

The Parliamentary Library's Federal Budget briefs provide a valuable resource each year. Portfolio briefs are currently being added to its Budget Review 2015-16. Here is the review by Philip Hamilton of Budget measures relating to the Federal Government's Smaller Government agenda.

Philip Hamilton writes:

Last year’s Budget introduced the Government’s Smaller Government agenda, which was characterised as a three-stage process for reducing the size of government through closures, mergers and consolidations of functions of government organisations. The first stage comprised the Machinery of Government changes following the 2013 election, and initiatives in the Mid-Year Economic and Fiscal Outlook (MYEFO) 2013–14 statement, with measures such as the amalgamation of AusAID and the Department of Foreign Affairs and Trade. The second stage was the 2014‒15 Budget, and the third was the MYEFO statement of December 2014.[1] With the fourth round of the agenda in the 2015‒16 Budget, Smaller Government appears to have become an ongoing ‘business as usual’ function, expanded to include a number of other efficiency-related objectives in addition to reducing the size of government.

For example, the Government has commenced Functional and Efficiency Reviews to determine whether the functions of departments and large agencies are aligned with the Government’s policy priorities, and whether they are working as efficiently as possible. Two such reviews have examined the departments of Health and Education and Training. The Government estimates that, including savings from the Health and Education reviews and further efficiencies in the Attorney-General’s Department and the Department of Immigration and Border Protection, Smaller Government announcements in the 2015‒16 Budget will deliver $497 million in savings, and will take total savings from the Government’s Smaller Government agenda to $1.4 billion.[2] In 2015–16, Functional and Efficiency Reviews will be undertaken of the departments of Agriculture, the Environment, Foreign Affairs and Trade, Treasury, Attorney-General’s and Social Services, as well as the Australian Taxation Office and the Australian Bureau of Statistics.[3]

A fifth stage of Smaller Government measures has been foreshadowed for the MYEFO statement due around December 2015.[4]

Reducing the size of government

In the 2015‒16 Budget the Government announced a further reduction in the number of government bodies by 35, which brings planned reductions to 286 since the 2013 election.[5] In general, the current round of changes can be characterised as ‘mergers and transfers’ (where bodies will be consolidated, or where functions will be performed by another body), and ‘abolitions’ (where a body will cease). In some cases, for example the Defence Materiel Organisation (DMO) and the Bureau of Resource and Energy Economics, both a transfer of function and an abolition are involved.

Mergers and transfers

Mergers and transfers of function have occurred, or will occur, in the following portfolios:

• in Defence, the core functions and funding of the DMO will be transferred to the Department of Defence.
• in Immigration, the Australian Customs and Border Protection Service and the Department of Immigration and Border Protection (DIBP) will be consolidated into a single department; the Office of the Migration Agents Registration Authority function will be consolidated into DIBP; and the Office of the Migration Agents Registration Authority Advisory Board will be replaced by a non-remunerated independent reference group.
• in Industry and Science, the functions of the Bureau of Resource and Energy Economics are now being performed by the Department of Industry and Science (DIS); the CSIRO Marine National Facility Steering Committee will become a subcommittee under the CSIRO Board; the function of the CSIRO Environment Strategic Advisory Committee has been reallocated by CSIRO; IIF Investments Pty Ltd and its assets have been transferred to DIS; and the functions of the Consumer Advocacy Panel have been transferred to Energy Consumers Australia (established by the South Australian Government on behalf of the Council of Australian Governments’ Energy Council).
• in Education and Training, the Office for Learning and Teaching Strategic Advisory Committee will be replaced with a program to be administered by the university sector.
• in Agriculture, the Freshwater Invertebrate Pests Subcommittee will merge with the Invasive Plants and Animals Committee.[6]

Abolitions

The table below (click twice to enlarge) lists, by portfolio, bodies to be abolished. Any residual functions will be managed or performed by a relevant body that is not being abolished, such as the portfolio department.

Table: Bodies to be abolished, by portfolio

* Bodies marked with an asterisk have already ceased.

Scoping studies into government business ownership options

In addition to merging and abolishing agencies, the Government has commissioned scoping studies into future ownership options for a number of government businesses.[7]

Following previously-announced scoping studies, the Government will retain ownership of the Royal Australian Mint in its current form, but will consult further before making a decision on Australian Hearing. Defence Housing Australia (DHA) will not be sold ‘at this time’, but DHA’s accounting, IT and business reporting systems will be reviewed to improve the transparency of the cost of providing services.[8] A competitive tender process will be undertaken to test private sector capacity to upgrade and operating the registry services of the Australian Securities and Investments Commission.[9] However, the Government will maintain ownership of the base data.[10]

In 2015‒16, scoping studies will make recommendations on the future ownership of the Intra-Government Communications Network (ICON) and the Australian Rail Track Corporation Ltd.[11]

Property portfolio and lease holdings

Observing that there are significant maintenance and opportunity costs associated with continued ownership of surplus properties, the Government will progress divestment ‘where appropriate’.[12]

Following a scoping study, the Government will retain ownership of the John Gorton Building and the Treasury Building ‘at this time.’[13] However, investor interest will be sought in four other properties in Canberra’s Parliamentary Triangle: East Block (currently tenanted) and West Block (recently vacated), both near Old Parliament House; and, across Lake Burley Griffin, Anzac Park East (vacant for decades) and Anzac Park West (currently tenanted).[14] All four of these properties, together with a separate Anzac Park West cafeteria building, are on the Commonwealth Heritage List.[15] The Department of Finance will be provided with $4.8 million over two years from 2015‒16 to implement these measures.[16]

Following last year’s Budget measure to establish the Australian Emergency Management Institute as a virtual institute, Finance will be provided with $0.5 million over two years from 2015‒16 for the divestment of the Institute’s property at Mount Macedon. For commercial confidentiality reasons, the Budget papers do not include the overall financial impact of selling the Canberra and Mount Macedon properties.[17] The Government will also dispose of up to 23 properties across regional Western Australia, Queensland, South Australia and the Northern Territory that are surplus to the service delivery requirements of the Department of the Prime Minister and Cabinet (PM&C). In this case, the Budget papers anticipate a return of $10 million over four years from 2015–16.[18]

In addition to divestment, large vacant legacy leases, which have previously been regarded as problems for individual agencies, will be handled through a whole-of-government approach that is estimated to save up to $200 million over 10 years. Priority will be given to reducing surplus office space in the ACT by tenanting with agencies that have similar requirements and upcoming lease expiry dates.[19] Pre-Budget media coverage noted concerns that a large and long-term Belconnen tenant, the Department of Immigration and Border Protection, would move to another part of Canberra as part of its merger with the Australian Customs and Border Protection Service.[20] Just before the Budget the Minister for Finance stated that the ‘long-term accommodation needs of the Department of Immigration and Border Protection and local impacts will be considered’.[21]

Streamlined and targeted program delivery

The Government is also focussed on ‘eliminating wasteful fragmentation in service delivery and removing unnecessary complexity in rules.’[22] The 2015–16 Budget states that the skilled migration and temporary activity visa program will be simplified by consolidating the number of visa categories.[23] Examples of measures undertaken prior to the 2015–16 Budget include, in the Social Services portfolio, the consolidation of 18 grants programs into seven and, under the Indigenous Advancement Strategy (IAS), the reorganisation of over 150 programs into five broad program categories.[24] In addition, grants administration in the Department of Health has been consolidated into a single division.[25] In a related measure, funding of $106.8 million over four years has been allocated to the Digital Transformation Office to establish streamlined grants administration processes.[26]

[1].          M Cormann (Minister for Finance), Smaller and more rational government 2014–15, Ministerial paper, May 2014, p. 2.

[2].          Australian Government, Agency resourcing: budget paper no. 4: 2015–16, p. 2.

[3].          Ibid.

[4].          M Cormann (Minister for Finance), Smaller government—transforming the public sector, media release, 11 May 2015.

[5].          Agency resourcing: budget paper no. 4: 2015–16, op. cit., p. 2. Not all of the previously announced abolitions have been fully implemented. For example, the Government has decided not to proceed with the abolition of the National Security Legislation Monitor, and bills to abolish the Clean Energy Finance Corporation, the Office of the Australian Information Commissioner, the Australian Charities and Not-for-profits Commission and the Australian Renewable Energy Agency are currently under consideration by Parliament.

[6].          Australian Government, Budget measures: budget paper no. 2: 2015–16, pp. 56–57, 74, 79, 125, 127, 130–31.

[7].          Agency resourcing: budget paper no. 4: 2015–16, op. cit., p. 4.

[8].          M Cormann (Minister for Finance), Smaller government – transforming the public sector, op. cit.

[9].          Budget measures: budget paper no. 2: 2015–16, op. cit., p. 93.

[10].       M Cormann (Minister for Finance), Smaller government – transforming the public sector, op. cit.

[11].       Ibid. ICON is a secure network connecting 97 government agencies in Canberra. The network is 882 km long, comprising approximately 160,000 km of fibre optic cables. ICON is provided by the Department of Finance on a cost-recovery basis, reportedly at ‘about a tenth of the cost of commercial cable.’ Senate Finance and Public Administration Legislation Committee, Official committee Hansard, 24 February 2015, p. 97.

[12].       Agency resourcing: budget paper no. 4: 2015–16, op. cit., p. 4.

[13].       M Cormann (Minister for Finance) and M McCormack (Parliamentary Secretary to the Minister for Finance), Getting best value from Commonwealth properties, media release, 11 May 2015.

[14].       Ibid.; Budget measures: budget paper no. 2: 2015–16, op. cit., p. 10.

[15].       Department of Finance (DoF), ‘Heritage Register’, DoF website.

[16].       Budget measures: budget paper no. 2: 2015–16, op. cit., p. 10; M Cormann (Minister for Finance) and M McCormack (Parliamentary Secretary to the Minister for Finance), Getting best value from Commonwealth properties, op. cit.

[17].       Budget measures: budget paper no. 2: 2015–16, op. cit., pp. 10–11.

[18].       Ibid., p. 200. The PM&C sales appear as Capital measures, whereas the Canberra and Mt Macedon sales on pp. 10–11 are Revenue measures—the reason for this apparent inconsistency is not clear from the Budget papers.

[19].       Agency resourcing: budget paper no. 4: 2015–16, op. cit., p. 4.

[20].       P Thomson, ‘Belconnen impact study before Immigration HQ decision welcomed,’ Canberra Times, 12 May 2015, p. 4; Editorial, ‘Consult ACT over offices,’ Canberra Times, 11 May 2015, p. 2.

[21].       M Cormann (Minister for Finance) and M McCormack (Parliamentary Secretary to the Minister for Finance), Getting best value from Commonwealth properties, op. cit.

[22].       Agency resourcing: budget paper no. 4: 2015–16, op. cit., p. 5.

[23].       Ibid.; Budget measures: budget paper no. 2: 2015–16, op. cit., p. 126.

[24].       Agency resourcing: budget paper no. 4: 2015–16, op. cit., p. 5. The Senate’s Finance and Public Administration Committee is currently inquiring into the implementation of the IAS.

[25].       Agency resourcing: budget paper no. 4: 2015–16, op. cit., p. 5.

[26].       Budget measures: budget paper no. 2: 2015–16, op. cit., p. 68; see also Interim Digital Transformation Office (DTO), ‘Better grants administration’, DTO website.