A series of federal departments warned their ministers of worsening funding pressures in briefs issued after the 2025 election, ahead of a push to identify further savings within the service.
Several of the same departments are now offering voluntary redundancies as they seek to shed staff in the lead up to a budget expected to call on the bureaucracy "to manage with less".
Finance Minister Katy Gallagher in Senate estimates in February. Picture by Keegan Carroll
The Climate Change Department, which began voluntary redundancies and a hiring freeze earlier this month, will see departmental funding for its climate change and energy portfolio fall by $177 million by the end of the 2028-29 financial year. Funding for environment and water functions is expected to fall by $356 million over the same period.
The departments of Social Services, Prime Minister and Cabinet and Education are all offering redundancies, as are the National Indigenous Australians Agency, Fair Work Ombudsman and the Australian Bureau of Statistics.
The widespread staffing squeeze is the first of its kind under the Albanese government, and follows a boom in the size of the federal public service, which has grown by about 41,000 places since 2022 .
Finance Minister Katy Gallagher has called the service roughly the "right size" at 213,349 Average Staffing Level (ASL), indicating that Labor is unlikely to reveal dramatic public service cuts in its fifth budget.
Instead, The Canberra Times understands the redundancies are linked to agency heads allowing staffing to grow beyond expectations, including permanent staff being hired where short-term contracts could be used.
Some agencies are also thought to be struggling to find room for the 11.2 per cent pay rise approved by Labor in 2023.
Social Services to cut more than 400 places
The Department of Social Services revealed it would need to reduce its workforce by 441 places to adjust to a funding drop of $47 million from the previous financial year.
"It's the department's responsibility to manage within its available resources and a reduction in workforce of this size will require careful reprioritisation," the brief, issued to Tanya Plibersek, reads.
"It's important the department understands your priorities clearly so our resources are allocated appropriately as we reduce the size of the workforce."
The Department of Health, which is offering redeployments to staff, flagged funding drops for operating costs in the coming years, including $575,000 less in the 2026-27 financial year.
It attributed this to the time-limited nature of budget measures, such as the New Aged Care Act and the termination of COVID-19 vaccination programs.
Finance linked "a proportionate reduction of the department's budget" to Labor's quest to find $12.1 billion in savings by the end of 2029 financial year by reducing contractors, consultants and labour hire.
The Department of Employment and Workplace Relations and the Attorney-General's Department also warned of budget crunches.
Attorney-General's will see departmental resourcing reduce over the forward estimates due to a large number of terminating measures, including parts of the National Strategy to Prevent and Respond to Child Sexual Abuse 2021-2030 and the High-Risk Terrorist Offenders Scheme.
"The department is taking measures to ensure its ongoing financial sustainability, including by reviewing all terminating measures," its brief reads.
"However, financial pressures will remain for the department in delivering the government's priorities.
"The department is operating with constrained resources but with no reduction in workload or performance expectations."
Extra savings request 'very substantial'
The briefs were issued following the May 2025 election and ahead of letters sent by the Albanese government to federal departments, asking them to identify further potential savings .
Former public servants say the request for departments to identify savings of up to 5 per cent of their budgets is "very substantial" , but Senator Gallagher has labelled it an "exercise in fiscal discipline".
The main public sector union has called on the Albanese government to intervene in job cuts.
Community and Public Sector Union national secretary Melissa Donnelly last month said if the reduction in agency spending was "not meant to be about cutting staff, then the government shouldn't have a problem with stepping in and directing agencies not to cut APS jobs to make that saving".
"People working in the public service aren't just worried about cuts, they're witnessing them," Ms Donnelly said.
"We're losing trained and trusted public sector workers in the name of budget savings, while big consulting and labour hire firms are still cashing in."
A spokesperson for Senator Gallagher has said it is always the case that "staffing levels shift between agencies over time in response to changing government priorities, the introduction of new programs, and the conclusion of others".
First published: in the Canberra Times on April 20, 2026 as "Departments already under pressure when Labor asked for 5 per cent savings", By Miriam Webber
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Image credits: Keegan Carroll
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