The outsourcing of public sector work to consultants and contractors is at the heart of perennial political debates between the country’s major parties. Now Labor intends to cut the government’s external staff bill by $3 billion.
The opposition Labor Party has reiterated its promise to cut $3 billion from federal government consulting and contractor bills over four years if it wins next month’s election.
Under the plan, Labor will reinvest some of the savings into rebuilding the internal capacity of the Australian Public Service (APS), while removing controversial staffing caps designed to keep its workforce in line with employment levels. 2006-07.
The policy announcement is the latest in an ongoing ideological battle over the outsourcing of government from the private sector between the two major parties, but which appears to be coming to a head as federal consultancy spending has continued to swell by year on year as the top seven recipients – McKinsey, BCG, Accenture and the Big Four – now collect more than $1 billion in combined annual fees.
Undoubtedly, the pandemic has contributed to increased consultancy costs, as well as the national digital transformation programme, but Labor argues that APS should have the in-house capacity to carry out most of this work. . Moreover, according to figures from the Australian Bureau of Statistics cited in a recent Australia Institute report calling for greater transparency, government spending on external staff had already doubled in the five years to 2020.
In response, Labor said it would rebuild APS capacity by increasing staff and reducing waste, aiming for a “significant” 10% reduction in its first year in office and from an initial reinvestment of almost $500 million, including on more than a 1,000 frontline service providers for Services Australia, the National Disability Insurance Agency and the Department of Veterans’ Affairs – the latter of which recently made call McKinsey.
Following on from the abolition of the average headcount cap, Labor has said it will also carry out an employment audit within the APS in its first year with a view to converting forms temporary work arrangements such as hired labor, casual or contract roles into more permanent positions, saying the “privatization of APS by stealth” had doomed “tens of thousands of public sector workers to the risks and constraints of precarious work”.
The Community and Public Sector Union was quick to welcome the announcement. “It is in the interests of both the ability of APS and the staff to keep this work in-house,” said CPSU National Secretary Melissa Donnelly. “Whenever public sector work is diverted to consultants, it is a missed opportunity to build capacity and capacity, and in a tightening labor market, if personnel are consistently overlooked for consultants, they will just go somewhere else.”
Understandably, the Liberals were less supportive of the proposed measures, having introduced APS staffing caps in 2015. Finance Minister Simon Birmingham told reporters the opposition plan was not at all believable. “The savings claimed by workers over contractors are as likely to happen as Anthony Albanese is to fly to the moon. The idea that Labor will uncap civil service figures but somehow end up saving money by spending less on contractors is fanciful.