Audit office to scrutinise APS labour hire use

Denham Sadler
National Affairs Editor

The national audit office is set to turn its attention to the rampant use of labour hire in the public sector, amid ongoing concerns about its impact on the capability and effectiveness of the Australian Public Service.

Addressing a Senate committee on Friday, Auditor-General Grant Hehir confirmed he would likely open an audit into several departments’ use of labour hire firms by the end of the year.

Auditor-General Grant Hehir.

“It’s something I’m quite keen to do, this is one I’d expect to start this year sometime,” Mr Hehir told the committee.

The use of labour hire has become common practice in the public sector and is particularly rife when it comes to tech work, with large digital multinationals often offering the labour hire themselves.

Some of the largest tech-focused agencies and departments, including the Digital Transformation Agency and Services Australia, have recently revealed the extent to which labour hire is utilised as part of the inquiry.

The Australian National Audit Office (ANAO) investigation will focus on the effectiveness of the management of non-ongoing staff at several large departments, likely to include Services Australia, the Australian Taxation Office, the Department of Defence and the Department of Veteran Affairs.

“There’s a significant amount of workforce use in the public sector on a contracting basis and the question that we thought was worthwhile asking was what frameworks do departments use to manage that workforce?” Mr Hehir said.

“The expectation we’d go in looking at is there’s a pile of rules around the APS workforce about expectations you have about how they go about doing their work in the public sector. When you’re contracting to bring in staff, do you put similar expectations around them?

“We want to compare a few agencies and see what sort of practices are there and compare and contrast how they use their contracted workforce.”

Several of the departments and agencies responsible for government tech projects and digital services regularly use labour hire.

One-third of the Digital Transformation Agency’s total workforce are labour hire staff, with 112 labour hires and contractors out of the total headcount of 277 people.

At the Department of Social Services, 14.6 per cent of the total workforce are labour hire staff, while more than a quarter of the National Disability Insurance Scheme’s workers are on a non-ongoing basis.

Following the onset of the COVID-19 pandemic, there are now fewer permanent staff at Services Australia, with 79 per cent of its workforce being permanent staff.

Mr Hehir also said that procurement in the public service is not up to the standards it should be.

“The strong evidence from audits is that the public sector’s approach to procurement often falls short of expectations, and it’s difficult to demonstrate achieved value for money. We regularly see entities complying with the letter of the procurement rules but not with their intent,” he said.

The decision to not go to open tender is too often based on this being “less costly and an easier process for the entity rather than a focus on the overall use of taxpayer funds”, Mr Hehir said.

Do you know more? Contact James Riley via Email.

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