As the government looks for budget savings, the biggest opportunity lies at the top. Senior public service pay and structures have become costly, inconsistent and hard to justify.

In grubbing around for budget savings the federal government will be looking to save on personnel whose costs can take up 30-90 per cent of agencies’ running expenses. Usually junior staff bear the burden of such foraging, although it would be nicer if a start could be made at the top for a change. There’s lots of scope, and sacrifices in the senior levels look good – setting the example and all that. The much touted Charter of Leadership Behaviours would rarely glow so brightly.

So Treasurer Jim, kick off with the salaries of Secretaries of departments.

At the moment all earn around a million dollars a year, almost twice the salary of the Prime Minister. This is the fault of the Remuneration Tribunal which around 15 years ago upped Secretary pay by around 75 per cent for no valid reasons and created a pay gap with the generality of their subordinates of around $600,000. It’s crazy.

The redoubtable Senator Lambie has recently tried by legislation to get things back on a sensible footing. Her bill has been considered by a Senate Committee but as that process is unlikely to restore rationality, Jim should step in and get Secretaries to volunteer a 30 per cent pay cut with the blow softened by laws providing that heads of departments could only be dismissed for reasons and by a reasonable process, just like all other public servants.

That would have the bonus (pun intended) of minimising the reluctance of officials to provide frank and clear advice which was the black heart the Robodebt debt disaster. Standing in the way of Ministers who wanted to extract political gain from sticking the boot into the community’s less fortunate was a sure-fire way to get sacked, as the dismissal of Renee Leon attests. Who can be expected to pipe up and say something is illegal if that’s going to put them on an unemployment queue?

Immediately below Secretaries, the remuneration of the Senior Executive Service is an epic shambles of individually negotiated arrangements in which, on 2024 figures:

• The maximum base salary of an SES 1 officer exceeded the minimum of another at SES 3 by $125,000.
• One SES 3 officer was paid a total reward of $1,222,037 – that is, around $200,000 more than the highest paid Secretary and around three times the remuneration of Treasurer Jim.
• One officer received a bonus payment of $404,610 – about what Jim is earning.

There is no rhyme or reason for nonsense like this. Pay for the SES should be adjusted to a single rate for each of the three levels at around the present median payment – say $250k, $320k and $400k. Not only would this be a saving but it would reduce the big administrative costs now associated with the common law agreements and other individual arrangements for each SES officer.

Then there’s abundant is scope to reduce the number of SES staff.

In 1975, for a federal public service of around 280,000 staff with far more complex functions than at present, there were some 20 SES 3 staff. Now, for a public service a little short of 200,000, there are around 160 SES 3s. In the last 50 years, the total number of SES staff has increased from 650 in 1975 to 3573 in 2025.

In the mid-1980s, the late Sir Frederick Wheeler, who was the principal architect of public service senior management structures, remnants of which can still be seen, was asked what he thought was the biggest problem in the public service. He said “Too many deputy secretaries.” Oh Fred, how lucky you are not to be able to see how much worse it’s got.

So, Jim might like to reduce the number of SES 3s to the level it was 40 years ago – circa 70, with commensurate reductions in SES 1s and 2s aiming at total SES of around 1500, again at about the levels of 1985. Off course a sensitive Treasurer like Jim might allow two or three years for these targets to be achieved with an emphasis on “natural attrition” with redundancies being a very last resort.

The pay and classification arrangements for the rest of the federal public service are equally shambolic and more consequential. Thus, again on 2024 figures:

• The maximum rate for one ASO5 position was some $120,000 more than minimum of a classification two levels above it.
• The maximum of an EL1 position exceeded the minimum in the SES 3 range also by about $120,000.
• An officer at the EL1 level received a performance bonus of $186,391, an amount in excess of the minimum base salary for a position in SES 1 level.

The Public Service Commission says its remuneration “principles” are based on being a model employer (whatever that means), having a unified public service, promoting staff mobility, attraction and retention, administrative efficiency and fairness and equity.

The results of the working of the system are an absolute mockery of these “principles”. It would be hard to design a more administratively costly and inefficient system in which classification is undermined, staff are treated inequitably and the promotion and staff transfer arrangements are subverted, all this by an organisation with the front to boast of being a “model employer”. A “unified public service”? Spare us.

A big part of the problem is the absence of a rational remuneration policy.

In the last round of negotiations increases were based on irrelevancies – past movements in wage indexes, interest rates and sniffing the economic winds. As these provided no basis for a sensible and workable pay structure or for fixing proper rates of pay, in the end a figure was simply pulled from a hat and the structural chaos was left largely unamended.

Public service remuneration should be fixed on the basis of comparisons on an occupational basis with levels of remuneration in comparable outside labour markets, especially at major recruitment points. That is what “model employers” do but it is not what the Commonwealth is doing. So waste and extravagance are mixed with meanness and inequity, remuneration levels are left to under or over-shoot the market and the personnel management system and efficiency and effectiveness suffer accordingly.

Treasurer Jim should seize the day, tidy up the system and reap the savings.

And as he looks for staff cuts below the SES, he should be honest and base them to the maximum extent on the abolition of functions or the willingness to have lower standards of government services. Usually that doesn’t happen because Ministers like to squeeze the system rather than risk the political blow back from the cutting of functions and services.

So come on Jim. Do it properly this time. You’re weights are up.