Bloated public service undermining CEOs’ hard decisions
11 November 2026
Originally published by Samantha Hutchinson of The Australian.
The wrecking ball swinging through private sector jobs offers no guarantee Australia will lift its dismal productivity because the benefits of tough calls are being undone by a bloated public service.
As a Qantas decision to slash 850 jobs sent shockwaves through the economy, leading economists, retailers and former regulators said they are braced for more job cuts, offshoring and artificial intelligence.
That is not the case in the public sector, where the federal wage bill has blown out to $43bn and headcount has grown 15 per cent since the Albanese government was elected.
“Australian companies are going to desperately need to improve their productivity,” former Australian Chamber of Commerce and Industry chair Graham Bradley said.
“[Productivity] has been virtually zero for the last decade, and we’ve also seen significant public sector growth with no productivity … which has offset any of the gains made in the private sector.”
He regretted how few options for retraining and redeployment laid off Australians have.
“The problem is not the destruction of jobs, it’s the lack of new jobs being created because we just don’t have that level of new investment because we’ve made Australia such an unattractive destination to invest.”
Qantas chief executive Vanessa Hudson attributed the airline’s surprise decision to outsource and offshore a portion of the workforce to consultant Accenture, with staff based locally and in India.
New efficiencies delivered by artificial intelligence will enable the legacy carrier to update outdated operating systems will also contribute to the job losses, she added.
Mr Bradley said that the impact of job cuts would be compounded by failures in Australia’s investment proposition. Hampered by over-regulation and open-ended timelines for approvals on major projects, Australia is losing out on opportunities for creating new jobs, meaning that unemployment will likely rise higher. Businesses will simply slash more jobs than new businesses can create, he said.
At the same time, executives and boards are likely to be persuaded by opportunistically trimming headcount at a time when households are pulling back on spending, economist Saul Eslake said.
“Qantas is one that’s shown itself to be willing to be pretty savage in cutting jobs and it’s visibly facing cost pressure from continually high jet fuel prices, some increased competition from Qatar and the reality is a lot of customers – consumers and households – are cutting back spending in the face of higher interest rates and falling real wages,” according to Mr Eslake.
“Companies that are in the business of catering to discretionary spending are clearly going to feel the pressure … and for many, flying is very much a discretionary expenditure.”
The easy wins artificial intelligence can deliver in replacing repetitive and lower-order tasks means the lay-off trend will endure, he predicted, arguing that the changes being implemented by white collar employers will be replicated in turn across all the legal, accounting and allied professional service providers.
“It’s an illustration of what’s going to come – but it doesn’t necessarily mean we’re on the precipice of something dramatic. It’s just a steadier drumbeat.”
Billionaire retailer Gerry Harvey said that a changing customer preference for online rather than bricks-and-mortar sales, combined with improved automation in warehousing and AI, had enabled Harvey Norman to rationalise its warehousing requirements – and in time, would likely have knock-on effects for headcount.
“Online is growing all the time – and we had 10 warehouses, now it’s six, and all sorts of things are happening across the business and then a lot of companies are looking at outsourcing to cheaper Asian countries like India and the Philippines.
“We’re having a much harder time than we did last year and retail is in that position where every one is really suffering compared to where they were a year ago … we’re going to see a lot more bankruptcies.”
David Jones last week called in voluntary administrators after deciding its financial position was untenable with rent obligations, five interest rate rises this year, and shifting customer habits. David Jones is owned by private equity firm Anchorage.
The wrecking ball swinging through private sector jobs offers no guarantee Australia will lift its dismal productivity because the benefits of tough calls are being undone by a bloated public service.
As a Qantas decision to slash 850 jobs sent shockwaves through the economy, leading economists, retailers and former regulators said they are braced for more job cuts, offshoring and artificial intelligence.
That is not the case in the public sector, where the federal wage bill has blown out to $43bn and headcount has grown 15 per cent since the Albanese government was elected.
“Australian companies are going to desperately need to improve their productivity,” former Australian Chamber of Commerce and Industry chair Graham Bradley said.
“[Productivity] has been virtually zero for the last decade, and we’ve also seen significant public sector growth with no productivity … which has offset any of the gains made in the private sector.”
He regretted how few options for retraining and redeployment laid off Australians have.
“The problem is not the destruction of jobs, it’s the lack of new jobs being created because we just don’t have that level of new investment because we’ve made Australia such an unattractive destination to invest.”
Qantas chief executive Vanessa Hudson attributed the airline’s surprise decision to outsource and offshore a portion of the workforce to consultant Accenture, with staff based locally and in India.
New efficiencies delivered by artificial intelligence will enable the legacy carrier to update outdated operating systems will also contribute to the job losses, she added.
Qantas’ move has followed similar axe swinging by major banks including ANZ and National Australia Bank, telcos Telstra and Optus and tech players including Wisetech Global, Atlassian and Canva, which last week announced a plan to shed 22 per cent of its headcount – amounting to 1271 jobs.
Mr Bradley said that the impact of job cuts would be compounded by failures in Australia’s investment proposition. Hampered by over-regulation and open-ended timelines for approvals on major projects, Australia is losing out on opportunities for creating new jobs, meaning that unemployment will likely rise higher. Businesses will simply slash more jobs than new businesses can create, he said.
At the same time, executives and boards are likely to be persuaded by opportunistically trimming headcount at a time when households are pulling back on spending, economist Saul Eslake said.
“Qantas is one that’s shown itself to be willing to be pretty savage in cutting jobs and it’s visibly facing cost pressure from continually high jet fuel prices, some increased competition from Qatar and the reality is a lot of customers – consumers and households – are cutting back spending in the face of higher interest rates and falling real wages,” according to Mr Eslake.
“Companies that are in the business of catering to discretionary spending are clearly going to feel the pressure … and for many, flying is very much a discretionary expenditure.”
The easy wins artificial intelligence can deliver in replacing repetitive and lower-order tasks means the lay-off trend will endure, he predicted, arguing that the changes being implemented by white collar employers will be replicated in turn across all the legal, accounting and allied professional service providers.
“It’s an illustration of what’s going to come – but it doesn’t necessarily mean we’re on the precipice of something dramatic. It’s just a steadier drumbeat.”
Billionaire retailer Gerry Harvey said that a changing customer preference for online rather than bricks-and-mortar sales, combined with improved automation in warehousing and AI, had enabled Harvey Norman to rationalise its warehousing requirements – and in time, would likely have knock-on effects for headcount.
“Online is growing all the time – and we had 10 warehouses, now it’s six, and all sorts of things are happening across the business and then a lot of companies are looking at outsourcing to cheaper Asian countries like India and the Philippines.
“We’re having a much harder time than we did last year and retail is in that position where every one is really suffering compared to where they were a year ago … we’re going to see a lot more bankruptcies.”
David Jones last week called in voluntary administrators after deciding its financial position was untenable with rent obligations, five interest rate rises this year, and shifting customer habits. David Jones is owned by private equity firm Anchorage.