Federal departments and agencies include bodies such as Treasury, the departments of agriculture, health, education, foreign affairs and trade and the Australian Taxation Office.
Across the public service, departments are in the midst of laying off non-permanent contractors to reduce their costs, public servants said.
Departments are also reducing their head counts through natural attrition and freezes on hiring for non-essential roles.
The CSIRO announced last week it would shed up to 350 positions, in addition to more than 800 roles it has cut over the past two years.
Officials said voluntary redundancies for permanent public servants appeared to be inevitable to meet cost-saving targets, sources said.
At the May federal election, Labor pledged to find $6.4 billion of savings in the public service across four years, with the bulk of the savings in the final year of the forward estimates.
However, the savings goal of up to 5 per cent that departments have been ordered to fulfil is for a single year.
Public sector wages data published by the Australian Bureau of Statistics this month showed spending on federal public sector wages was $40.9 billion last financial year, an increase of 9.5 per cent, on top of a 10 per cent rise in 2023-24.
Key government departments including Health, Climate and Energy, Social Services and Attorney-General’s sounded the alarm in their incoming briefs to ministers, warning of budget cuts as large as 50 per cent in coming years and asking where they should plan to cut workers.
The worst of the looming budget shortfalls take effect from 2026-27, when funding expires for at least 100 programs, and likely dozens more.
Even before the latest savings directive, departments were scrambling to cut spending as thousands of new hires, above-inflation pay rises and a surge in workers’ compensation expenses caused blowouts in public service budgets
last year worth more than $1 billion.In its analysis of Labor’s election costings, the independent Parliamentary Budget Office assumed that the public service would have to shed 22,500 staff to meet Labor’s $30 billion wages forecast.
Asked about the planned spending cuts across the public service, a spokesman for Gallagher said the Albanese government was continuing to find responsible savings while delivering the services Australians expected.
“We delivered almost $100 billion in savings and reprioritisations in our first term, including $5.3 billion in savings from non-wage expenses like contractors, consultants, and labour hire – and have committed to a further $6.4 billion in savings over the next four years,” the person said.
“Departments and agencies are responsible for managing their allocated resources and finding savings and reprioritisations to assist with budget repair.”
Canberra-based former Department of Finance deputy secretary Stephen Bartos said the public service was finding it challenging to meet budget targets.
“Anecdotally, a number of agencies are feeling pressure on departmental expenses and finding it hard to make ends meet,” said Bartos.
The total public service workforce has grown by about 38,200 since 2021 to 193,500, according to the Australian Public Service Commission.
Across the public service, the head count jump has been partly offset by reducing reliance on contractors and consultants, which grew rapidly under the former Coalition government.