Contracting cancelling out wage savings for APS

by Chloe Taylor30 Nov 2015
An investigation has revealed that the money being saved by the government through cutting public service jobs is being negated by an increase in the hiring of costly consultants and contractors.

Eighteen major Commonwealth departments saved $109 million in wages during the last financial year, an analysis by Fairfax Media found.

However, consultant and contractor costs increased by a massive $205 million, putting the same 18 departments’ total bill for consultants and contractors at just over $1 billion for the 2014-15 financial year.

According to Fairfax, half of the increase can be attributed to a $100 million Department of Human Services (DHS) contract, which was used to update the department’s struggling IT system.

DHS also increased its wage bill by $16 million.

Five other departments – Treasury, Finance, Social Services, Immigration and Infrastructure – cut the cost of wages, but those savings were cancelled out by increased outsourcing fees.

In total, those departments saved $53 million on wages, and spent an additional $81 million on consultants and contractors.

They also paid out $78 million in redundancy packages.

The figures refer to the umbrella departments, as opposed to the departments under their scope, and do not include superannuation or leave costs.

Prior to becoming prime minister, Malcolm Turnbull voiced concern about the rising use of contractors in the public service.

“What we have to do in government, in my view, is stop panning public servants and do more to ensure that they do their job better,” he said.

“And one of the ways to do that is to make sure they do the work that is their core responsibility, as opposed to outsourcing everything.”

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