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Tanner: “It’s going to be a very tough Budget…”

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Thank goodness he later qualified that rather chilling comment by suggesting the “tough” part of the Budget was on those charged with framing it!

However, Lindsay Tanner’s speech to the National Press Club last week further underscored the determination of the Rudd Government to restore efficiency and productivity within Federal Government agencies.  He was particularly unapologetic about the $4 billion in savings to Government running costs that will be achieved over 5 years, stating that when the Labor Government came to office, the administrative costs of the Government were growing at 5% in real terms. 

He described the Government’s early decision to introduce an additional 2% Efficiency Dividend as:

“wearable because, over the past five or six years of the Howard Government, enormous fat crept in. We had four Federal Budgets in a row with virtually no savings... So there was a lot of stuff to be extracted, and we’re keeping at it.”

Tanner made it clear that he sees ICT as playing a critical role in delivering the productivity gains that ensure government services are maintained and improved, holding aloft his mobile phone and exhorting:

“We will look back… and call this period of human existence the era of the mobile phone… The internet, obviously, equally. But, the internet and the mobile phone, they’re becoming the same thing.  Now, we can’t fund public service organisations on the assumption that none of these things have an impact.   And so the efficiency dividend… is designed to continually put pressure on managers to exploit new technologies, to exploit new ways of working to get better outcomes.”

The Finance Minister also praised the Government’s recent investment in TelePresence, supplied in partnership by Cisco and Telstra, stating:

“…they’ll cost about $4 million a year to run. We expect to get some of that back from a contribution from the state governments, because we are installing them in a way that will mean that the states will be able to benefit as well. We’ll save much more in airfares and lost working time. We’ll improve public sector productivity.”

However, Lindsay Tanner made it clear the 2009-10 Budget is going to be tough, especially for any organisation that provides goods and services to the Government.  He said the reform program, which had already yielded $400 million in procurement savings, would continue, and gave very clear parameters to how the Budget will be framed:

“We will not increase spending beyond two per cent in real terms and we’ll require new spending initiatives to be fully off-set by savings.”

Given the Global Financial Crisis, and the sudden turnaround of Government finances from surplus to deficit, Intermedium thinks it IS going to be a very tough Budget!

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