Dutton reinvents job cuts policy, relying on voluntary exits over forced redundancies

After public backlash, Coalition leader Peter Dutton has backtracked on his staunch policy to cut 41,000 public service roles – instead leaning on voluntary resignations.

Peter Dutton originally kicked off his election campaign confirming that he would cut 41,000 public sector workers – which was an increase from his original pledge of 36,000. Dutton claimed that these cuts would free up around $7 billion from the federal budget.

“We will reverse Labor’s increase of 41,000 Canberra-based public servants – saving $7 billion a year. That’s money we can provide back to the Australian people in frontline services,” Dutton said.

However, due to mounting backlash, and federal election pressures, Dutton has rolled back his controversial policy, instead claiming that he would achieve the cuts over a five-year span through “natural attrition.”

Speaking on the changes to the policy, shadow treasurer Angus Taylor clarified the reinvented focuses of the policy.

“Hiring freezes and natural attrition are the focus… and it's not frontline services, it's Canberra-based public servants as the focus. We've been clear about that. We've said that it will be five years. Look, it's a big public service now.”

“It's got a lot bigger under Labor, so the natural attrition is significant and that's why, over a five year period, we believe we can bring the public service down by 41,000.”

“The important point here is you don't need a bigger team to have a better team. I learnt this in the private sector. Unlike so many on the Labor side, I have deep experience in business in the private sector, and I know what it means to have a great team where great people are doing great work and are enjoying their work at the same time,” said Taylor.

HR Leader reached out to Damien Andreasen, vice-president of HiBob APJ about the Coalition's decision to rely on “natural attrition” and the effect that it can have on a workforce going forward.

“The decision on Dutton’s voluntary resignations sets a concerning precedent. When the public service, an institution meant to model fairness, stability and long-term thinking, starts relying on voluntary resignations to save costs, it sends the message that they are likely struggling, which may in turn demotivate employees, harm productivity and therefore reduce output.”

“This also creates a climate of uncertainty, which can be incredibly damaging to an organisation’s morale. People start to question their future, the value of their roles and whether leadership is being upfront with their decision-making. That kind of culture doesn’t just affect day-to-day performance — it impacts trust as a whole.”

“Given the public sector often sets the tone for broader workplace practices, important decisions like these need to be made with a clear view of the long-term cultural impact,” said Andreasen.

Karlie Cremin, co-founder of Dynamic Leadership Programs Australia (DLPA) added that going the voluntary route when it comes to reducing workforce headcount can produce a number of significant risks.

“Relying on voluntary resignations or hiring freezes as a means to reduce headcount amight seem like a softer alternative to forced redundancies, but it comes with significant risks.”

“These approaches can lead to uneven workforce gaps, where critical skills walk out the door while less impacted areas remain untouched. It’s a reactive method that lacks the strategic oversight needed to ensure workforce alignment with future service delivery needs.”

“When reductions aren’t planned through a structured workforce strategy, organisations risk losing corporate memory, specialist expertise and leadership continuity. Hiring freezes, in particular, can place pressure on remaining staff, stifle capability renewal and slow innovation,” Cremin said.

According to Cremin, voluntary redundancies are an efficiency killer, often increasing workplace stress.

“Voluntary redundancies are highly problematic from an efficiency standpoint as you run the risk of losing key team members and you lose control of critically appraising the skills needed of the organisation, and the talent strategy overall.”

“It also can lead to much higher levels of stress in your workforce as people are pushed into doing tasks beyond their competencies or teams are stretched beyond capacity. Such a blanket response is unlikely to recognise the needs of individual workgroups, and the nuances of how such a large organisation is actually functioning.”

“While voluntary approaches may avoid immediate political or reputational damage, they often mask deeper organisational challenges and push problems down the road. Sustainable workforce reform requires intentional design - not attrition by chance,” said Cremin.