Job Cuts in Victoria: A Costly Decision?

As the saying goes, when you're in a hole, stop digging. Victoria currently finds itself deep in a "deficit and debt hole", according to economist Saul Eslake.

While the Allan government shows no signs of pulling up its vast suite of infrastructure projects, it did flag this week that the shovel would be swapped for an axe in the public service. The announcement, made by Premier Jacinta Allan and Treasurer Jaclyn Symes, undoubtedly unsettled the state's 57,000 public servants.

"Between two and three thousand [Victorian Public Service] jobs will be expected to go," Ms Symes told reporters gathered at Parliament House.

Standing alongside her, the premier explained the cuts would be made to deliver services that would help Victorians in a cost-of-living crisis. "We're also zeroing in on reducing waste duplication and improving efficiency across the public service," Jacinta Allan stated.

Who the jobs facing the chopping block belong to and when they will be shown the door remains a mystery. Decisions will be guided by a review led by Helen Silver, aimed at cutting 6% from the public service workforce.

The cost of her services hasn't been revealed, but her initial suggestions will be handed to the government in time to write savings into the state budget, to be delivered on May 20.

Between now and then, a federal election is guaranteed. Political analyst Kos Samaras warned: "If they don't get on top of the narrative and clarify which parts of the public sector they plan to cut, they could potentially allow everyone in the public sector to think they're a target."

Victorian Government's Fiscal Crisis

Samaras, a former Labor party strategist, emphasized that normally, announcements about public service cuts would be carefully crafted. "Leaving it open-ended and allowing people to basically walk around for months not knowing if they're going to have a job or not, that's really dumb politics," he said.

The aim of the job cuts is to save billions of dollars to ease the pressure on Victoria's besieged bottom line. A report from the Victorian Auditor-General's Office found the cost of the government's major projects had ballooned by $11 billion since last year, with net debt forecast to grow to $187.3 billion by June 30, 2028.

While acknowledging the necessity of trimming the public service, RMIT economics professor Chris Berg pointed out that Victoria's fiscal crisis is the fault of the Victorian government alone.

"Ultimately if you're going to shrink the size of government, government is going to have to do less."

Short Deadline for the Newly Minted Treasurer

The plan to cut about 3,000 public service jobs follows a similar commitment made by the previous treasurer Tim Pallas. Since then, the number of full-time jobs in the public service has climbed, albeit slightly.

"Previous attempts haven't worked. That's why I've brought in an expert such as Helen," Ms Symes stated. The press conference marked the two-month anniversary of Ms Symes holding the state's purse strings.

Saul Eslake explained that the government must balance the need to make tough decisions with ample time for the public to forgive before the state election in November 2026, while navigating a federal election expected soon. "They've got to get this stuff done quickly, and hope that by the time November '26 rolls around, voters have forgotten about it and that there will actually be some benefit, for example, showing that the budget is moving back to surplus," he said.

The economist concluded that the government essentially has two options: raising taxes or cutting spending. "There is no alternative," he stated. "I think they should be doing both."