Opposition promises to remove APS staffing cap, with ‘no impact on budget’

By Stephen Easton

Thursday August 9, 2018

If the Turnbull government is turfed out of office at the next election, its arbitrary cap on Australian Public Service staffing levels will go with it.

Jim Chalmers, the Shadow Minister for Finance, says that under a Labor government, agency staffing would be linked to “operational requirements” instead of limited by a policy to keep the APS about the same size it was at the end of the Howard years in 2007. At the same time, he says he would maintain tight limits on agency funding.

Technically, it is only a few days after the earliest possible date that a federal election could have been held and still more than a year before the last opportunity, but there is growing speculation that the Prime Minister will pull the trigger much sooner than that.

The opposition is campaigning early so as not to be caught napping by a short run-up and Chalmers indicates that “strengthening capacity and capability within the Australian Public Service” is a key element of Labor’s platform.

“The ASL cap has become counterproductive, leading to a hollowing out of the public service and sparking a blowout in spending on contractors and consultants,” he said in a statement.

“By abolishing the cap, agencies will be allowed to set their staffing levels based on operational requirements. Agencies’ overall funding levels will remain capped, meaning there will be no impact on the Budget.”

Jim Chalmers

Average staffing levels are a financial construct reported in each year’s budget, as an actual figure for the previous financial year and a projection for the year ahead, but do not translate into an exact headcount at any point in time. Having less permanent staff and more employed on non-ongoing contracts or brought in from labour-hire firms allows for more fluctuations throughout the year, while sticking to a particular ASL.

There are instances where using labour-hire firms makes sense to agency executives — as it does to leaders of for-profit companies in certain cases — but the ASL limit can also force agencies to hire external staff in situations where they would not do so otherwise.

While the political debate tends to be highly polarised, academic literature suggests public-sector outsourcing is not always a bad idea although there are lots of risks, many of which were demonstrated by the recent collapse of Carillion in the United Kingdom. A lot of APS leaders would welcome the freedom to make decisions on a case-by-case basis, rather than a blanket policy informed by either ideological extreme.

One of the pre-eminent academic experts on the topic, John Alford, advised upon his retirement last year that decisions about whether to privatise or outsource “should not be decided on the ideological basis or left-right divide, where one side says everything not nailed down should be privatised and the other side says [to] keep everything currently in government”.

“Rather, we should meet that decision based on an understanding of the benefits and costs of each of the options, and to define the costs fairly broadly,” he said. “A position of horses for courses, not one size fits all.”

Staffing cap ‘a blunt instrument’

Chalmers quotes the government’s most senior public servant, Prime Minister and Cabinet secretary Martin Parkinson, who reportedly agreed a simple cap on staffing levels was “a blunt instrument” in an interview with The Canberra Times.

The Shadow Minister also noted a submission from PM&C to the Joint Committee of Public Accounts and Audit’s recent inquiry, which highlighted the impact of the ASL cap and the difficulty of working out how many external staff and of what type — labour-hire contractors or more expensive expert consultants — are actually working for the APS.

In the end, some APS entities furnished the powerful committee with some of this information on demand, including PM&C, which also submitted “views and commentary” such as this:

“With the implementation of staffing caps in the Australian Public Service, agencies have more frequently needed to engage external contractor and consultancy services to fill key roles. Through removing ASL caps, agencies may have greater flexibility to recruit specialist staff at a reduced cost.”

The Finance Minister, Mathias Cormann, has repeatedly made a simple counter-argument: that the cost of administration as a proportion of overall spending has continued to drop under the Coalition policy.

This decline in proportional administrative costs is a very long-term trend and appears largely unrelated to deliberate action by any particular government with respect to the public service as a whole. The government’s total spending as a proportion of gross domestic product has also grown significantly under the Abbott and Turnbull governments.

As deputy chair of the JCPAA, Labor MP Julian Hill has prosecuted the case against the ASL cap with zeal and made sure to highlight confirmed cases of agencies using labour-hire firms only because of the staffing cap, at higher cost to the agency and with lower pay to the contractors themselves.

“By imposing an arbitrary cap, the Liberals are forcing Government agencies to spend more taxpayer dollars on less,” said Chalmers.

The perennial and sharply polarised political debate around public-sector outsourcing and privatisation heated up again yesterday with the announcement that Centrelink will outsource another 1500 call-centre staff on top of 1250 already on the phones.

The Community and Public Sector Union is up in arms about the deal and attacked the four companies providing the call centres as well as the government, raising another issue besides cost and the creation of lower-paid, insecure employment: the need for expertise.

On one hand, call centres are commonly outsourced throughout the economy, with smaller organisations calling on huge service providers with the scale to provide them as a service efficiently, but it is also fair to say this can mean the quality of customer service suffers.

“Family support and the other cases that Centrelink workers deal with are extremely complex and sensitive, and staff have detailed knowledge of the relevant legislation to provide genuine help,” CPSU national secretary Nadine Flood argued yesterday.

“The community expects to deal with professionals, not get shunted around private call centres staffed by people being paid thousands of dollars less, with massive staff turnover. Often these wasted hours on the phone only end when clients are transferred to a direct Centrelink employee who knows what they’re talking about.”

She said the companies engaged by Centrelink did not care about their own employees or the citizens who contact the agency, and claimed Serco would make millions while paying the staff a relatively austere $20.90 per hour.

The union also rolled out the common claim that when in power, politicians who believe in small government actively defund and degrade public agencies so they can use their declining performance as a reason to sell them off or transfer their work to the private sector.

Linda Burney

Labor has made a point of focusing on how its policy would change the National Disability Insurance Agency, which is much smaller than recommended in 2012 by the architects of the NDIS at the Productivity Commission, and has used a small army of external staff to develop and manage support plans for people with disabilities as a result.

“Our plan will help ensure expertise, experience and corporate memory is retained in the public service by encouraging agencies to employ permanent bureaucrats over contractors and consultants,” Chalmers said.

Shadow Minister for Human Services, Linda Burney, and the Shadow Minister for Disability and Carers, Carol Brown, released a statement yesterday noting the Productivity Commission recommended the staffing cap be removed for the NDIA in a report last year that was highly critical of the roll-out.

Why the cap creates ‘a false economy’

Carol Brown

Burney and Brown claim the NDIA has spent over $145 million on contractors and temps and outsourced the equivalent of 380 full-time call-centre jobs from Serco at the price of $63m in recent times, and spent $61m on consultants during the 2016-17 and 2017-18 financial years.

Like Chalmers, they argue the changes can be made without any increase to the budget for the Geelong-based agency.

“The staff cap creates a false economy, forcing the NDIA to rely on outsourcing and contractors, which is often more expensive,” said Brown, who is a Senator for Tasmania.

“The cap makes it harder to develop a first-class public sector workforce with the outstanding skills in delivering disability supports that will be needed into the future.”

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