Police briefings show finances at ‘tipping point’

Briefings to Police Minister Mark Mitchell show the department faces a $320 million deficit next year, and unless it gets a major cash injection it may not be able to afford the current number of constabulary staff.

The financial sustainability reports released to Newsroom show there is a forecast deficit for this current year of $120m, brought down to $56m through cost-cutting measures, but is expected to blow out by a further $200m by the end of 2025.

That’s a quick increase on October’s forecast when police anticipated a $111m deficit with cost savings closing that gap to $35.6m by the end of June.

Cost-cutting measures have included a hiring freeze on non-constabulary staff for the first three months of the year and although that has technically lifted, police have decided not to fill any non-constabulary vacancies for the whole year without executive leadership team sign-off. 

“Non-constabulary are significantly involved in the delivery of core services to the public (e.g., emergency call centres, investigation/case management, etc) and providing services that directly support the front line. This means maintaining an appropriate proportion of non-constabulary staff to constabulary staff is essential to the delivery of these services,” officials noted.  

Top brass also have to approve any new consultant or contractor spending and conferences that involve 10 or more people. Travel budgets have also been cut in half.  

All projects underway, or due to get underway this year, are also being scrutinised to see if there is opportunity to slow, defer or completely stop the projects.  

Police were appropriated just over $2.6 billion for the current financial year, an increase of $705m since 2019 driven by funding for growth in remuneration, staffing levels and specific initiatives such as the Frontline Safety Improvement Programme, Arms Safety and Control, and Preventing Harm from Organised Crime in Communities. 

About a quarter of its new funding over this time was for the 1800 new police promised under Labour in 2018, a third was for new initiatives while a similar amount was for increased remuneration costs.  

But it is pressure on police’s baseline funding, which officials described as the “tipping point”, Mark Mitchell would need to address. 

The briefing described how over the years baseline expenditure had increasingly been taken away from infrastructure and assets and instead used to recruit and retain staff, but that it had reached a point where spending could no longer carry on this way. 

“Reprioritisation of funding has meant a continued decline in our core enabling infrastructure, combined with the recent 1800 growth, a tipping point has been reached where this can no longer continue, and investment will be required to improve our infrastructure and to enable any future growth of police.

“There are significant critical risks and cost pressures that cannot be met through reprioritisation of baseline without significantly impacting on our ability to maintain constabulary headcount.” 

The Government has promised 500 extra staff in the next two years. 

Remuneration costs have put significant pressure on police’s baseline over the years. The average salary has increased 17 percent since 2019. 

Personnel expenditure is about 70 percent of police’s baseline. 

Pay negotiations with the Police Association union have been ongoing since early last year.  

Just last night police voted overwhelmingly to turn down the latest offer which would have seen the Government stump up an additional $250m. 

Mitchell described it as “an incredibly disappointing outcome”. 

Police Association president Chris Cahill said it sent a very strong message to police executive and the Government that officers were not feeling valued for the work they do and the dangers they face each day. 

The negotiations are now likely to go to arbitration. 

Police officials also said being part of the Justice Cluster, which came into effect in 2019 as a way for justice-focused agencies to work together and pool funding for certain initiatives, was having an impact on its ability to secure funds from government.  

“Introduction of the Justice Cluster and three-year funding envelopes limits the frequency with which police is able to seek new Crown investment for critical core assets and cost pressures primarily driven by recent inflation, and also means investment bids for police must be considered and prioritised alongside those of our Justice Sector partners.” 

Mitchell said he was not considering removing police from the cluster.  

Police also detailed how an increase in technology and investment in recent years was putting pressure on depreciation costs. 

“Police’s capital expenditure has historically been around $100m per financial year. This has significantly increased over the past few years with a spend of $174m in financial year 2022/23.”  

The increase was driven by spending on run-down property, “keeping the lights on” technology investment and replacement of the Holden Commodore fleet. 

“This has a flow-on effect of depreciation which previously had an average cost of $90m per financial year but is now forecast to increase to $110m for this financial year. Some Crown funding has been received to cover depreciation relating to new initiatives and property revaluations, but the majority of this increase is required to be funded from our baseline funding.” 

Officials said due to the “multi-year deferral” of investment in police infrastructure, significant cost pressures loomed with a $9m increase this year on operational costs alone.  

The briefing summed up the bleak situation: “The pressure on police’s baseline will not improve in future financial years as cost pressures are forecast to increase and the outcomes of current collective bargaining is still unknown. This poses a significant financial risk to police.” 

Mitchell acknowledged police, along with many other departments, were facing cost pressures. 

“Decisions concerning funding are yet to be made and are part of the ongoing budget process,” he said.