Outsourcing is on the nose: CPSU

James Riley
Editorial Director

The government’s six-week, $858,000 deal with McKinsey to provide advice on the design of Services Australia has been slammed by the public sector union, with fears it will lead to more outsourcing and privatisation in the new department.

McKinsey will work with the newly established Services Australia taskforce to develop the strategy, with KPMG also subcontracting on the project.

It has also been revealed that the McKinsey pitch for the $848,000 contract was at a ‘highly discounted’ rate, with the belief there would be a significant amount of work with the new department in the future. Separately, the company signed a three-year, $5.9 million contract with the department for ongoing management advice.

Nadine Flood: Outsourced consulting fees could be better spent on skilled public servants

The Community and Public Sector Union (CPSU) slammed the deal, saying the money could have been better spent on bringing in a team of public sector workers to design the new department.

“The amount of money being spent over six weeks could fund a number of public servants working on this review. You could probably fund a taskforce of around 10 APS staff for a year for the same amount,” CPSU national secretary Nadine Flood told InnovationAus.com.

“What you would then get is people with actual expertise in the public sector and a real sense of what staff need to deal with coming up with solutions,” Ms Flood said.

“Instead it’s just more taxpayer money going to line the pockets of big consulting firms, instead of paying for good services from our government.”

The short nature of the contract is unlikely to result in any significant change, with more outsourcing likely once the department is properly established, Ms Flood said.

“Given the timeframe of six weeks, it is unclear what these consultants will be able to do, other than something off the shelf, or a very shallow review that doesn’t actually engage with DHS staff about what the problems are and how to fix it,” she said.

“We suspect the solution they will suggest is more outsourcing and more privatisation, which of course means more taxpayer dollars for them. It’s a neat circle of our money going around and around, but that money should be going reducing pensioner wait times and keeping jobs at our borders.”

Joint Committee of Public Accounts and Audit deputy chair Julian Hill also said that the work should have been kept within the public sector.

“This is exactly the kind of project that should be led by some of the best and brightest next generation leaders, taken outside of their day-to-day and tasked with thinking and redesigning, supported by external expertise where needed,” Mr Hill told InnovationAus.com.

Services Australia was announced by Prime Minister Scott Morrison following the May election as a rebadged Department of Human Services, with an aim to follow in the footsteps of the successful Services NSW.

A Department of Human Services spokesperson declined to comment on the outsourcing claims and McKinsey’s pitch for the work.

“Procurement decisions made by the Department are made in accordance with the Commonwealth Procurement Rules,” the spokesperson said.

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