Public sector union’s recommendations for the 2022 budget highlight consultant, labour hire glut

By Melissa Coade

March 28, 2022

parliament house, canberra
A new government needs to ensure its personnel are aligned with a new vision. (Randal/Adobe)

How many labour-hire workers does it take to keep the public sector delivering essential services and the cogs in the machine of government wheels turning?

The Community and Public Sector Union (CPSU) estimates government labour-hire workers now number 20,000, and the huge cost of engaging them is not flowing to the benefit of individual staff.

In a pre-budget submission document shared with The Mandarin, the union said recruitment firm Hays managed 2,900-strong personnel of an estimated 20,000 labour-hire workers for the Australian public service (APS). This number is larger than the workforce of the Departments of Finance, and Prime Minister and Cabinet combined.

On average, this means one in five people engaged to perform public sector work (excluding consultants, contractors or outsourced providers) are non-APS workers. Keeping this workforce on the books in 2020 cost taxpayers approximately $2.5 billion – as a very conservative estimate – with agency responses to questions in 2020-21 budget senate estimates showing ‘significant mark ups’ built into the cost based on the maximum and minimum fees paid to labour-hire firms.

“What is unclear from [agency] responses is if this includes the GST paid on these contracts, which may mean the information provided is understated,” the union submission read, noting in 2017 the Commonwealth Director of Public Prosecutions (CDPP) reported labour-hire employees were paid 3% less but cost the agency 25-28% more to engage than directly employing them. 

“This extensive use of labour-hire occurs despite it costing more. The lack of value for money has been confirmed by agencies themselves.”

Even finance minister Simon Birmingham has confessed it is more efficient and effective to use APS staff for ongoing work following the 2020 budget, the union said. So why has nothing been done to fix the problem?

Union secretary Melissa Donnelly said even agencies like the Department of Veterans’ Affairs, which received more government money last year, did not record a net increase in workforce. 

“There’s a number of things at play here. Whilst there’s a broad acknowledgement of the cost and inefficiency of the arrangement, the government hasn’t actually backed it up with changing these labour-hiring arrangements to public sector workforce numbers,” Donnelly said. 

The union argues where non-ongoing or casual roles were ‘genuinely required’ in the Australian public sector, those workers should still be employed under the Public Service Act. Ultimately, it says, the government must prioritise a ‘secure, experienced’ and permanent workforce if it wants to be able to guarantee a strong and resilient APS.

Direct permanent employment should be the principal mode of employment in the APS, and is one of nine recommendations for change put forward by the union in tomorrow’s upcoming budget

“Contrary to government claims that labour hire is used for short-term work, there is widespread evidence across the APS of long-term labour-hire use for roles that are clearly on-going work,” the submission read.

“The Public Service Act provides a range of employment options, including non-ongoing, fixed-term and casual work – and those forms should be used where there is a genuine need for short-term or temporary work instead of paying fees to labour-hire companies year after year.”

While last year the government moved away from the APS-wide staffing level (ASL) cap (which had driven labour-hire arrangements across departments and agencies), Donnelly said the arrangements were still prevalent in significant numbers. Determining just what that number was had become an exercise in deep research for the union because nobody in government, neither the APSC nor Finance, claimed to be responsible for the task, she added. 

“We would like to see in this budget, the federal government act on the huge number of labour hire and consultants across the APS,” Donnelly said.

“[And] no one is taking any responsibility for the reporting and understanding the costs involved in the use of labour-hire arrangements or consulting arrangements for that matter. 

“Given the pressure on the use of taxpayer money and the transparency that the community would expect, it’s really not good enough, that it’s just been put in the too hard basket at the moment,” she said. 

Establishing mandatory collection and publication of standardised data on contractors, consultants and labour hire across the APS is another one of the CPSU’s nine budget recommendations. The union says this data collection should include counting numbers of external employees engaged, expenditure, pay and conditions, margins and cost differential.

So far as the ‘explosion’ in the government’s use of consultancy firms is concerned, the union pointed to the significant increase in outsourcing happening in tandem with APS wages and salaries staying flat. Since the Coalition government came to power in 2013, the union said the government’s use of consultants almost doubled, and $4.6 billion in taxpayer money was spent on 21,507 consultancy contracts by agencies between 1 July 2014 and 20 June 2020.  

“Without the pressure of transparency and accountability, the erosion of APS capability through outsourced, insecure work will continue,” the union submission said.

“A more permanent APS workforce with secure jobs creates the foundation for a more skilled workforce, retaining experience and knowledge the APS needs to deliver better outcomes and more effective services for all Australians.”

The union also wants the government to fully abolish the ASL at agency and portfolio levels so that government organisations are empowered to manage their staffing levels within the funding provided, plus an enforceable provision to be included in all consultancy contracts that stipulates skill transfer back to APS employees. 

The CPSU has also called for a revision of the Public Sector Workplace Relations Policy 2020 to permit ‘genuine bargaining’; an increase in APS employees to relieve workload pressures; and more public sector opportunities in regional Australia.


Committee calls for consultant spending restrictions and uncapped APS staffing levels

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