Labor pledges to cut government outsourcing by $3b

Denham Sadler
Senior Reporter

Labor has outlined a plan to cut government spending on contractors and consultants by $3 billion and scrap the controversial public sector jobs cap, along with a policy to ensure Big Tech firms pay more tax.

Shadow Minister for the Public Service Katy Gallagher announced the plan on Wednesday afternoon, with a focus on reducing wasteful spending in the public sector and reinvesting it in full time service delivery jobs.

The Opposition also on Wednesday released its multinational taxation plan, matching OECD policies with a focus on ensuring Big Tech firms pay more tax in Australia. This will raise $1.89 billion over the next four years, Labor’s plan said.

Senator Gallagher said the Coalition has hampered the ability of the public service to deliver for Australians by making continual cuts to it and eroding internal capability, with an increased spend on consultants, contractors and labour hire firms.

“This privatisation of the APS by stealth is not only costing Australian taxpayers more – it is condemning tens of thousands of public sector workers to the risks and stresses of insecure work,” Senator Gallagher said in a statement.

Shadow Minister for the Public Service Katy Gallagher

Labor’s plan will see the scrapping of the APS staffing cap, which limits departments and agencies to staffing levels the same as in 2006-07, and a reduction in the outsourcing of public sector work by $3 billion over the coming four years.

From these savings, $500 million will be reinvested to “begin rebalancing and rebuilding the internal capacity and capability of the APS”, the Labor plan said. This would include 1080 new frontline jobs at Services Australia, the Department of Veteran Affairs and the National Disability Insurance Scheme.

“The last two years have shown just how important it is to have the APS resourced appropriately so that it can meet the needs of and deliver services to the Australian community,” Senator Gallagher said.

“Only an Albanese Labor government will ensure the APS has the capability and people to respond to these challenges as it has proudly done for the past 120 years.”

The Coalition government is on track to spend more than $1.2 billion in a single year on a handful of consultants, with significant amounts of tech work being outsourced to the private sector. has covered the growing spend on large consulting firms on a range of core government tech projects, including the redevelopment of myGov, the digital identity scheme and visa processing.

Spending on consultants and contractors has also ballooned during the pandemic, with some of the big four firms seeing their government revenue more than double in the last two years.

Labor’s announcement was welcomed by the Community and Public Sector Union, with its national secretary Melissa Donnelly saying it is a “big start on reversing the enormous damage the Morrison government has done to the APS”.

“Labor’s commitment to scrap the arbitrary cap on secure work would mean thousands of workers in insecure labour contracts will get the opportunity for secure jobs,” Ms Donnelly said.

“There are talented staff across the APS who can do the work currently being handed to consultants and contractors. It is in the interest of both the capacity of the APS and staff to keep this work in-house.

“Every time public sector work is syphoned off to consultants it is a missed opportunity to build capacity and capability, and in a tightening labour market if staff are constantly overlooked for consultants, they’ll simply go elsewhere.”

With three and a half weeks remaining in the election campaign, Labor has also released its multinational tax policy, which is in line with the wider OECD policy adopted by more than 100 countries aiming to make large corporations pay more tax.

These include supporting a global 15 per cent minimum tax and ensuring the profits of large tech companies are taxed where the product or services are sold.

A Labor government would also limit debt-related deductions by multinationals at 30 per cent of profits, and limit the ability for them to abuse Australia’s tax treaties when holding intellectual property in tax havens.

The Opposition has also promised new transparency measures for government tenders, including reporting requirements on tax information, beneficial ownership and tax haven exposure.

This multinational tax plan will rake in $1.89 billion over the forward estimates, Labor said.

A Labor government will also task Treasury and the Department of Finance to conduct a “waste” audit investigating the spending of departments and agencies within its first year in office.

Do you know more? Contact James Riley via Email.

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