Coalition could axe 17,000 public sector jobs

The Finance Department advised the Coalition after the September election that Labor's economy drive, which was already factored into future budgets, would result in the loss of about 14,500 full-time-equivalent staff.

However, new data in Tuesday's Mid-Year Economic and Fiscal Outlook shows the government's workforce could shrink to about 239,400 full-time employees in 2015-16 - or about 17,200 fewer jobs than in 2012-13.

The outlook reveals plans to cut wages spending by $197 million next financial year, even though public sector salaries are expected to rise by about 3 per cent, in line with government policy.

The wages data suggests the federal workforce - which includes military personnel, public servants and staff in other agencies - would shrink every year until 2016-17, when it would begin to grow again, albeit slowly.

The accuracy of the forecasts depends on the extent of wage rises and whether the Coalition refrains from implementing programs or policies that need extra staff. However, it employs the same methodology used by the Finance Department.

In October, Finance Minister Mathias Cormann ditched the Coalition's plan to shed 12,000 public service jobs by natural attrition, saying Labor's cuts made the plan unworkable.

The mid-year outlook says the government ''remains committed to streamlining the public service, but will review the timing and approach to implementing its commitment in view of the expected headcount reduction required by the former government's efficiency dividends and associated measures".

"Further decisions on the public service headcount will be taken in light of the findings of the national commission of audit,'' it says.