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A federal government department responsible for protecting Australia's "way of life" is on the cusp of requiring a financial bailout, as it falls hundreds of millions of dollars into the red.
Key points:
- Permanent employees are not expected to be laid off in a bid to constrain spending
- Contract numbers could be drastically slashed
- The financial woes are believed to be linked to its ability to recover costs for its services
The Department of Agriculture, Fisheries and Forestry (DAFF) is cutting costs, has banned staff travel and training, and has begun sacking contractors.
One insider with knowledge of the cash flow woes described the department's finances as "custard," another has told the ABC the situation is desperate and must be addressed within months, adding: "it's a problem that's been festering for a long time".
Permanent staff at the department are not expected to be laid off, but contract numbers could be drastically slashed.
The Agriculture Department is responsible for regulating trade, biosecurity and farm production.
According to its mission statement, it works to "maintain and create agricultural export opportunities, to provide gains for Australian agriculture, fishing and forestry".
"We manage biosecurity risks to Australia to protect our multi-billion-dollar industries and our way of life," it said.
In a statement to the ABC, a department spokesperson confirmed it had "taken action to reduce expenditure", stating a range of cost saving measures had been introduced.
"Those measures include restrictions on non-essential travel and training; re-prioritising non-critical projects; and a reduction in contracted workforce numbers," they said.
"The department has done this carefully to reduce any impact on the department's priorities, service levels or regulatory responsibilities."
The spokesperson also said the department continually assesses contracted staffing levels and had "commenced the cessation of some contractor arrangements as a result".
Following questions from the ABC, the department's secretary, Andrew Metcalfe, issued an email to all of its staff outlining the cost-saving measures and thanking employees for their commitment.
"Over the last few financial years, the cost of delivering our essential services and policy and program responsibilities has outstripped the revenue coming into the department," Mr Metcalfe said.
"And costs associated with machinery of government changes has also had an impact."
In the email Mr Metcalfe confirmed the department was stopping all domestic and international travel unless "absolutely essential".
It also said the department would "close or defer a number of initiatives" and "temporarily pause most new recruitment".
Funding model not reviewed
Finance Minister Katy Gallagher, who also holds the public service portfolio, has previously said the number of contractors employed across the APS is too high.
The department's spending on consultants has jumped to almost $90 million in 2021-22, up from $5 million in 2012-13.
Unlike other departments, the agriculture department relies on cost recovery for its funding.
Cost recovery is when the industry pays for services such as biosecurity detections and quarantine at airports, shipping terminals and mail centres.
The funding model has not been reviewed for at least eight years, despite demand for services increasing with more parcels travelling though the post, and the threat of devastating Foot and Mouth Disease and African Swine Fever edging closer to Australia.
The agriculture departments' funding woes are believed to be linked to its ability to recover costs for its services.
Spending on IT systems and costs associated with merging in 2019, and then de-merging in 2022, with the environment department have also been touted as contributing to the budgetary balls-up.
Biosecurity levy axed
In 2018, then Agriculture Minister David Littleproud announced the department would raise $325 million over three years through a biosecurity levy, another example of a cost recovery measure.
The budget outlined a $10 per 20-foot shipping container and $1 per tonne of raw freight biosecurity charge, but after lobbying from the cement and minerals industry it was never introduced.
The Coalition government had been consulting on a new cost-recovery model — based on risk — before the last election.
Last October, Agriculture Minister Murray Watt told ABC’s Landline that the country’s biosecurity services required extra funding.
“Of course it's reasonable to ask tax payers to contribute some of that funding," he said at the time.
"But we do need to make sure that people who are causing biosecurity risks pay their fair share, users of the system pay their fair share, as well as government providing resources as well and that’s something I’m currently working on with my colleagues."