Increasing financial pressure faced by government is constraining resource levels in the APS and accentuating the need to drive greater efficiencies across the service. The efficiency dividend is ‘an annual funding reduction for Commonwealth government agencies [that] has been in place for 25 years’.¹⁴ During 2012–13, the efficiency dividend of 1.5% was combined with a one-off additional efficiency dividend of 2.5%. The efficiency mechanisms discussed here are shared service arrangements and other strategies agencies have introduced in response to the efficiency dividend.

Similar to 2011–12, agencies reported that they are managing reduced resourcing by reviewing employee costs, and business practices and processes, and by reducing domestic and international travel, the use of consultants and contractors, and printing and publication costs. A number of agencies also reported prioritising and/or ceasing work to achieve outcomes within a reduced resource environment.

Agencies have also been working together and coordinating the purchase of common goods and services, with 67% reporting they had participated, to some extent, in a shared service arrangement in 2012–13. As can be seen from Table 10.3, the most common shared service agencies used in 2012–13 was information and communications technology (ICT). Other shared services reported by agencies included procurement and risk management services, call centre functions and knowledge and records management and/or library facilities.

Managing shared service arrangements requires careful planning, implementation and ongoing effective communication. Agencies reported these lessons learned from shared service arrangements in 2012–13:

• written agreements need to be clear
• relationships and communication need to be good
• arrangements need to be cost effective
• employees must have knowledge of and actively manage the arrangements to the benefit
  
  of the agency
• dispute resolution mechanisms need to be built into arrangements so concerns can be resolved.

In 2012–13, agencies were also asked to identify the workforce strategies they had implemented in response to the efficiency dividend. The majority of agencies reported using executive approval for recruitment actions (63%) and actively reviewing vacant positions (61%). Agencies also reported using job design processes (50%) and general reviews of classification levels (27%). Other examples provided by agencies included recruitment freezes, reduced employee numbers through voluntary redundancies, reduced reliance on contractors and realignment, and/or restructure of work groups.

Footnotes

¹⁴ Parliament of Australia, The Commonwealth Efficiency Dividend: An Overview, Commonwealth of Australia, Canberra, (2012), p. 1, http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BN/2012-2013/EfficiencyDividend.