Why is the Australian government cutting public service jobs now?

The Albanese government is offering voluntary redundancies to rein in a $31 billion public sector wages bill that is threatening the federal budget. After increasing the workforce by 41,000 people since taking office, the government faces a decade of forecast deficits and debt approaching $1 trillion.

Which roles and departments are being targeted for job cuts?

The cuts primarily target middle managers and senior executives (EL1, EL2, and SES levels) earning over $100,000 per year. Major agencies involved include the Department of Prime Minister and Cabinet, Home Affairs, Treasury, the Australian Bureau of Statistics, and the CSIRO.

How much has the Australian public service grown under the Labor government?

Since Labor took office four years ago, the number of public servants has grown by nearly 25%, adding approximately 41,000 people to reach a total of 213,000. While the government intended this growth to reduce reliance on expensive external consultants and contractors, the resulting "hiring spree" has caused employee expenses to outpace original budget allocations.

What are the financial incentives for public servants to leave?

Long-serving officials are eligible for voluntary redundancy packages that can result in six-figure payouts. These payouts are designed to encourage staff in high-salary brackets—such as Executive Level 2 staff who earn between $149,000 and $176,000—to exit the service.

How many more jobs might be cut over the next four years?

According to Parliamentary Budget Office (PBO) estimates, the government may need to cut up to 28,000 additional bureaucratic roles over the next four years to meet its wage bill forecasts. Analysis indicates an extra $11.8 billion in savings is required to prevent further budget blowouts.

What are the main risks to the Australian federal budget mentioned in the report?

Treasurer Jim Chalmers is navigating a "perfect storm" of fiscal pressures, including government spending at a 40-year high (excluding pandemic emergencies) and national debt nearing $1 trillion. A Department of Finance briefing also warned of a significant spike in employee expenses to $41.6 billion by 2025-26.

How does the government's strategy affect the use of external consultants?

The government’s stated long-term goal is to rebuild internal capability and decrease reliance on the "shadow workforce" of consultants that grew under the previous Coalition government. However, the Community and Public Sector Union (CPSU) argues that current job cuts are counterproductive.

What is the difference between Labor’s job cuts and the Coalition’s 2025 election plan?

The Labor government is currently managing what it describes as "operational" shifts and voluntary redundancies to fit existing budgets. In contrast, during the 2025 election, the Coalition proposed a more aggressive plan to slash 36,000 public service roles.

Labor cuts public service to curb budget

Written by Mahathir BayenaPublished May. 3 2026Last Updated May. 3 2026

The Albanese government has commenced a sweeping push for voluntary redundancies across the federal bureaucracy as it moves to rein in a ballooning $31 billion public sector wages bill.

The strategy primarily targets middle management and senior executives earning upwards of $100,000, with long-serving officials eligible for six-figure payouts.

Since Labor assumed office four years ago, the public service has expanded by 41,000 employees—a nearly 25% increase.

While the government initially sought to rebuild internal capability and reduce the "shadow workforce" of external consultants, the rapid hiring spree has placed immense pressure on the federal budget.

Estimates from the Parliamentary Budget Office suggest Labor may need to cut as many as 28,000 roles over the next four years to align with its forecast wage allocations.

Key agencies—including the Department of Prime Minister and Cabinet, Home Affairs, and the CSIRO—are now seeking expressions of interest for redundancies. Some departments have also implemented recruitment freezes for non-essential roles.

Finance Minister Katy Gallagher maintained that the government has not ordered "across-the-board" cuts, stating that agencies are simply managing staffing within existing budgets and shifting priorities.

However, the Coalition and the Community and Public Sector Union have both criticised the move.

Opposition spokeswoman Claire Chandler accused the government of fiscal mismanagement, while union secretary Melissa Donnelly warned that the loss of experienced personnel would erode policy development.

With debt approaching $1 trillion, Treasurer Jim Chalmers faces the daunting task of finalising a May 12 budget that balances service delivery with fiscal restraint.