No governments in Australia have relied on their public services to provide the entirety of their policy advice and administration. From its earliest days, for example, the postal service engaged private providers in rural areas where it was not feasible to have government-staffed post offices. And while the public service should be the principal policy adviser to governments, there has always been scope for other opinions. The trick for governments is to know how to get a balance in sources of support that promotes a capable public service.
Much of the direct outsourcing of functions in the 1990s to run call centres and provide cleaning, grounds maintenance, catering, health and legal services and the like has been successful. Some cases have been tragic failures, computing support for example. The lesson is that outsourcing has a better chance where the functions are more routine and where there is a competitive outside market. Complex functions are risky as their outsourcing cuts into the heart of the public service, erodes its knowledge of how these functions work and leaves the government open to exploitation.
In addition to the outsourcing of whole functions, in the 21st century there is much evidence, including in the Thodey Review report of 2019, that the Commonwealth government has become too reliant on outside providers for both policy advice and the administration of government programs. Billions of dollars are being spent on management consultants and tens of thousands of contractors and labour hire, many of whom are performing tasks usually undertaken by public servants.
The Constitution and the Public Service Act provides an almost exclusive code for employment in the public service. This code gives all citizens a right to apply for government employment and to be assessed on their merits. With contractors and labour hire employees now effectively in public service positions, the legislated merit provisions of the employment code are being bypassed, doors are being opened to nepotism and favouritism and equal employment opportunity is being compromised. Staff are being admitted to the public service by virtue of their association with private contracting firms to whom they own their primary allegiances. They are not subject to the Public Service Act values or its disciplinary provisions and contractors holding staffing delegations would have incentives to employ comrades from their companies, an insidious risk.
The usual reasons for the use of contractors and labour hire hold no water:
In the distraction of this fakery, details of the employment of labour hire and contractors in the public service have been suppressed. They are not included in the total staff numbers reported by the Public Service Commission or departmental and agency annual reports. That is to say, these reports are seriously misleading on staff numbers.
Tens of thousands of labour hire and contractors are in the public service with a price tag in the billions. It is also likely that the per capita cost of these staff is greater than public servants performing comparable work because the contracting firms need to get their cut.
The government should make it clear that consultants should only be used when strictly necessary and they should not be engaged for ongoing work.
While the new government has said it will clean up these appalling habits, the immediate scope for action is uncertain because the dimensions of the problem are unclear. Sensibly it has said it will undertake an "audit". At a minimum that should seek data from all departments and agencies before the end of June on numbers, the period of engagements, work being done, costs versus costs of regular public servants, the nature of the contracts under which the outside assistance was sought, if any contract staff have been given financial and personnel delegations, advice on the legality of each arrangement, explanations as to the real reasons for the engagements and why the work contractors and labour hire are doing cannot be done by regular public servants.
This is a frightful scandal about which the central agencies have been irresponsible. The legal guardian of the merit principle, the Public Service Commission, has not even issued guidance to departments and agencies about the use of contractors and labour hire and the essentiality of staffing being fully consistent with the Public Service Act. It should be instructed immediately to do so.
As for consultants, they will always have a place in supporting governments. They can be called on for advice when there is a lack of relevant expertise in the public service, provide second opinions on advice from officials, assist with management reviews and so on. There is a solid body of opinion, however, suggesting that consultants have been too much used in recent years and that the capacity of the public service has been damaged and its memory degraded as consultants take their knowledge and experience away with them. For the moment, however, the government should make it clear that consultants should only be used when strictly necessary and they should not be engaged for ongoing work or placed in line management positions.
As with contractors and labour hire, the picture on consultants is hazy and the government would do well to fill that by gathering information on all present consultancies over say $100,000 including the identity of the consultant, the price being paid, a summary of the statements of requirement and the outputs sought, the period of each engagement, an estimate of the number of person days involved and an explanation of why consultants were used rather than in-house staff.
To a significant extent the use of contractors/labour hire and consultants in the public service is as it is because the dealings are conducted pretty much behind closed doors. Information about it is impossible or very difficult to discover as anyone who has trawled through the AusTender lists will know. Departments and agencies don't report even the basics and the Public Service Commission refuses to answer questions about the costs of its consultancies for example. There is no effective accountability and so discipline is sacrificed and a playground is provided for irresponsible behaviour.
If the new government wants effectively to ensure that labour hire, contractors and consultants are used properly and in accordance with the law, a useful first step would be to open the system to full public scrutiny and accountability. In addition to the government's audit, departments and agencies should provide comprehensive details of all engagements on their websites as they are made and reproduce that information in their annual reports and so bring proper accountability and discipline to the system. While insufficient in itself, openness would promote the capacity and better working of the public service and help to save much of the money now being splurged on dubious causes.
Cleaning out the stables will take time but it will be time well spent.
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