The Victorian government is initiating significant changes to its public service structure in response to escalating debt and rising operational costs. Following an independent review ordered by Treasurer Jaclyn Symes in February 2023, the state aims to reduce the size of its workforce and enhance efficiency. The review, which concluded on June 30, 2023, recommended 52 measures, 45 of which the government has agreed to adopt, either fully or in principle.
The backdrop to these changes stems from a pressing fiscal situation. Victoria’s net debt is projected to reach $194 billion by mid-2029, with interest repayments expected to soar to nearly $29 million daily. Although the previous treasurer, Tim Pallas, aimed to cut between 3,000 and 4,000 public service jobs in the 2023/24 budget, employee numbers actually increased slightly. The latest budget forecasts the state’s total wage bill will escalate from $38 billion in 2024/25 to $42.4 billion by 2028/29.
The forthcoming changes will primarily focus on cost reductions and consolidating government entities. The most notable measures include the elimination of 332 executive and executive-like positions, which is projected to save approximately $359 million over the next four years. Additionally, caps on VPS5 and VPS6 positions will be set at 15 percent, aiming to save $125 million, while consultancy and labor hire expenditures will be reduced by 10 percent, contributing another $113 million in savings.
Key Restructuring Moves
Several public entities and boards will undergo significant restructuring as part of this initiative. For instance, VicHealth and HealthShare Victoria will be integrated into the Department of Health. In another significant change, the regulatory functions of PrimeSafe, Dairy Food Safety Victoria, local councils, and the Department of Health will be merged into a new body named Safe Food Victoria.
Moreover, the Game Management Authority and Victorian Fisheries Authority will be combined to create an Outdoor Regulator. Other notable integrations include the absorption of Recycling Victoria into the Environment Protection Authority, and the merging of the Office of the Racing Integrity Commissioner with the Victorian Racing Integrity Board to form the Racing Integrity Commission Victoria.
The government will also focus on reducing operational budgets, exemplified by plans to cut the budget of Infrastructure Victoria by half and absorb Emergency Recovery Victoria into Emergency Management Victoria. Several entities will be phased out entirely, including Sustainability Victoria and Cladding Safety Victoria.
While the government is moving forward with these cuts and consolidations, it has also decided to reject seven of the review’s recommendations, including the cessation of programs for doctors, dentists, and music in schools.
In a statement, Premier Jacinta Allan highlighted that despite these changes, there will be no job losses for essential frontline workers such as teachers, nurses, police, and child protection employees. As the government navigates these financial challenges, the focus remains on ensuring the core services that support the Victorian community are maintained and strengthened.
