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Finance Minister Katy Gallagher has denied the Albanese government will cut public service jobs as part of its efforts to find savings across departmental budgets.
The Albanese government recently wrote to government departments asking them to look at finding budget savings of up to five per cent.
Ms Gallagher told Sky News Sunday Agenda that the request to identify lower-priority spending was not a precursor to redundancies.
“If you’re asking me if that five per cent exercise we’re doing is going to result in job losses, I can say that is not what this exercise is about,” she said.
“As to whether there are ups and downs – and I’ve said this consistently over the last three years – across departments, that will fluctuate a little.
“But broadly across the APS (Australian Public Service), I would expect the APS to remain largely the same.”
The comments come despite the APS swelling by about 40,000 people since the Albanese government came to power in 2022.
Ms Gallagher stressed that the five per cent cost saving exercise was aimed at ensuring departments reprioritise their existing budgets efficiently.
“The problem I’ve got is that there’s a lot of ministers wanting to do a lot of things, a lot of departments wanting to do a lot of things,” she said.
“They come requesting more money for those things. And at some point, you know, you have to say, well, we can’t just keep giving you more money for these things.
“You need to look at what you’re doing now and reprioritise within your existing budgets.”
The comments come amid record growth in the APS, which reached 198,529 staff in June 2025—an increase of more than 39,000 since Labor came to power in 2022.
Economist Chris Richardson has warned that the government’s budget forecasts assume a reduction in the public service wage bill.
This would mean that roughly 7,000 jobs would need to be cut annually for the numbers to balance, despite Ms Gallagher saying the public service was the right size.
“The government forecasts its wage bill to stay steady. But wage growth is around 3.5 per cent a year,” Mr Richardson said.
“So, if the wage bill isn’t changing but wages are, then the number of jobs has to go down at the same pace that wages go up – that is, by around 3.5 per cent a year.
“Given direct Australian public service numbers of around 200,000 people, that says job losses of about 3.5 per cent of that – or 7,000 a year.”
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