ServicesAus defends outsourcing cost

Denham Sadler
National Affairs Editor

Outsourcing public sector work and calling in the contractors is often a “timely, cost-effective” option made necessary by the staffing cap and a lack of internal tech expertise, according to the new Services Australia department.

Outsourcing at the new department has been in the spotlight recently as it was revealed that McKinsey and KPMG had won a six-week deal worth $868,000 to help design the strategy for Services Australia.

The Opposition has raised concerns this will lead to an “expensive, debilitating dependency” on outsourcing, while the public sector workers’ union said it risks leading to more privatisation.

In its submission to a Senate inquiry into the impact of changes to service delivery models on the administration and running of government program, Services Australia argues that outsourcing some roles is an efficient and cost-effective way to deliver services.

“Non-APS staff arrangements are used as a timely, cost-effective way to complement, not replace, the department’s current service delivery workforce. This workforce mix is not uncommon in large organisations with diverse functions,” the Services Australia submission said.

“In general, this blend of resourcing arrangements helps us deliver timely services and provides flexibility to meet changing demand for services.”

Bringing in external workers also helps the department address skills gaps within the public sector.

“The ability to access contractors and consultants with highly-specialised skills helps us to meet needs that are difficult to address through reassigning staff internally, or through APS recruitment,” it said.

“Contracting in specialist skills has also allowed for the upskilling of existing APS staff and the acceleration of specific work programs, such as IT projects.”
“Employing non-APS staff provides timely access to the people needed for specific and often time-limited priorities.”

The new department also blamed its reliance on outsourcing on the federal government’s Average Staffing Level cap, which aims to keep the public sector to the same size as it was in 2007.

“Our commitment to delivering the best services we can for all Australians means that we consistently operate at, or near, the limits of our ASL cap,” the submission said.

“As a result, additional resources are sometimes required to deliver on government priorities or to progress initiatives to transform and modernise our technology and capability,” it said.

“The department regularly receives funds, often as part of the annual budget process, to deliver specific initiatives. These initiatives come with additional service obligations, and where we are already operating at our ASL limit, it is important to be able to access non-APS resources to make sure we have the capacity to deliver on all of the government’s priorities.”

The use of external consultants to help design Services Australia has raised concerns that the new department will be too reliant on outsourcing.
Labor MP Julian Hill said the use of these consultants was “deeply concerning”.

“There’s absolutely a role for external expertise and consultants where there’s particular capability or where a second opinion or genuine knowledge transfer from other jurisdictions is needed,” Mr Hill told in August.

“But the extent of the outsourcing and the potential gravy train for high-price consultants in Services Australia is deeply concerning.”

The Community and Public Sector Union also criticised the use of outsourcing to design Services Australia.

“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,” the CPSU told

“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. 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 senate inquiry is specifically looking at the privatisation of Australia’s visa and citizenship program, the robo-debt scheme and the broader outsourcing within the Human Services portfolio.

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