Slashing consultants will help save the government $2.1 billion in the upcoming budget, countering a coalition promise to repair federal finances by axing public servants.
Commonwealth employees have been in the sights of the opposition, which claims the growth of the public service headcount is emblematic of wasteful government spending under Labor.
The Albanese government's fourth budget, to be handed down on Tuesday, is set to show a substantial increase in new spending commitments, including $8.5 billion for Medicare and $1.8 billion in energy rebates.
But Finance Minister Katy Gallagher revealed $720 million in savings as a result of reduced spending on consultants and other external labour.
She claims to have found $2.1 billion in savings and spending reductions that help fund increases elsewhere behind the budget couch for 2025/26.
The government has maintained its staffing increases have strengthened the public service and reduced its reliance on costly consultants.
"The coalition have decided to beat up the public service," Senator Gallagher said.
"I think it's an honourable profession and we need to resource it properly to do the jobs that they need to do."
The opposition has promised to bring the budget back to surplus by curbing ballooning government spending, in part by returning the public service to the same size as its last term of government - about 36,000 people less than now.
But coalition finance spokeswoman Jane Hume would not commit to the 36,000 figure when pressed on it.
"We think that the size of the public service has blown out too far. We will see the numbers on Tuesday night to exactly just how far it has blown out," she told ABC News Breakfast on Monday.
"A bigger public service is not necessarily a better public service."
The coalition has ruled out cuts to frontline services but the government says it's inevitable roles in key agencies such as defence, veterans' affairs and health will be in the firing line, because that's where the new jobs have come from.
"You can't run around saying you're going to cut 36,000 jobs and then pretend that they're not going to come from any of those frontline service areas," Senator Gallagher said.
Cuts of that scale would reduce the public service by about a fifth, which Opposition Leader Peter Dutton claims would save the budget $6 billion per year, or about 0.8 per cent of government spending.
Economists such as Saul Eslake, Steven Hamilton and Productivity Commission chair Danielle Wood say the proposed cuts would have a minimal impact on federal spending.
Both major parties have promised to boost spending to help ease hip-pocket pain, with the coalition backing in the government's $150 energy bill rebate divided equally across the final two quarters of 2025.
Treasurer Jim Chalmers denied it was a pre-election bribe for voters, with Australians set to head to the polls by May 17 at the latest.
"I would describe it as a government responding to the pressures that people still feel despite this progress that we've made on inflation," he said.
Independent Senator Jacqui Lambie slammed the government for extending eligibility to every Australia, rather than targeting people who need it most.
"It's not means tested. What do I need 150 bucks for? What a waste of money," she told Nine's Today Show.
