Next week’s federal budget will reduce spending on consultants, contractors, and labour hire by $1 billion, the government says.

Finance minister Katy Gallagher says it’s part of a commitment to reduce the reliance on external labour and build a fit-for-purpose public service.

The 2022-23 October budget cut $3 billion from spending on external labour.

“The Albanese Labor Government will deliver a further $1 billion in savings from reducing spending on consultants, contractors, and labour hire in the 2024-25 Budget,” Senator Gallagher said.

But she admitted it was getting hard to make the savings.

“It is getting harder,” she told the ABC. “I think the first two budgets you saw us really lean in and find large amounts, billions of dollars in savings… as pressures increase on the budget it is harder.

“But this is an area as we rebalance the public service and employ permanent public servants into those roles that were perhaps held by consultants and contractors and labour hire, that we can also reduce expenditure across government.”

The Government will also do a second Audit of Employment to measure how the public service is reducing its reliance on external labour, Senator Gallagher says.

Since the 2022 election, around 8,700 roles that were previously done by contractors or labour hire are now being performed by public servants, she said.

The use of the biggest consulting firms has also significantly reduced, dropping by $624 million this financial year compared to 2021-2022.

$314m to boost safety at Servcies Australia

Meanwhile, Government Services minister Bill Shorten said the budget will provide new funding to boost safety for staff and customers at Services Australia offices with an investment of $314 million over two years.

In 2022-23, there were 10 million visitors to Services Australia service centres to access government payments, including Centrelink, Medicare and the Aged Pension.

In the same year, there were 9,000 incidents of aggression in service centres in local community hubs and shopping centres.

The funding will provide for up to 606 security guards, better security features in all service centres, a centralised Security Operations Centre with live monitoring, better liaison with local police and enhanced service centre design for centres at risk of high levels of customer aggression.

“Services Australia has more than 6,200 staff working across 318 service centres, Mr Shorten said.

“These staff do an important and difficult job for their community. We want to make sure they return home from work safely every day.”

Treasurer Jim Chalmers will deliver the federal budget on Tuesday.