Outsourcing Government itself: the hidden privatisation of the public service

by | Sep 8, 2020 | Government

The privatisation of the Australian Public Service is proceeding at a staggering pace. Documents accessed under Freedom of Information laws reveal that even senior roles, including assistant directors, executive officers and ministerial advisers, are being outsourced. It is hidden, unaccountable and rips off taxpayers. Geordie Wilson reports.

It’s been assumed by critics of privatisation, that outsourcing in the public service is mostly in call centre, technology, or consulting roles. However, documents obtained by MichaelWest.com.au show that even senior roles are being outsourced now. Senior public servants work in department buildings and take orders from the minister, but their real employer is actually a private business.

We have identified that senior roles in policy, management, biosecurity and even ministerial advice are now filled by private business. Even assistant directors & executives at many departments are now privately run. The headcount of non-IT public servant roles outsourced by the government is in the thousands.

No accountability

The outsourcing destroys government accountability. Labour hire contractors aren’t counted in annual reports, and aren’t mentioned in organisational charts. Parliament and the public are being misled about the way our public service truly runs.

Hiring through outsourcing isn’t checked or balanced by the public service act or government registers. Bureaucrat fiefdoms have emerged instead. We have received stories of senior officers at departments hiring sexual partners through procurement, handing them a do-nothing job without the usual hiring checks. It’s unsurprising that we have heard such stories given how little labour hire is tracked.

This off-the-books outsourcing has been driven by Finance Minister Mathias Cormann’s staffing caps, according to senior departmental sources. In an effort to keep things running with fewer staff, the public service has responded by quietly moving its workforce off the books. There is no evidence that actual de facto headcounts are lower, or that money is being saved. Cormann’s attempt at reform has become an accounting trick.

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One also wonders whether public servants are being taken off-book for more cynical reasons. The public service’s management of off-shore detention centres occurs almost entirely through labour outsourcing, keeping everything far away from the prying eyes of Freedom of Information requests. Home Affairs Minister Peter Dutton’s proposed overhaul of the visa granting process was going to be done by private staffing firms, and private staffing have been involved in the writing of reports proposing major government reforms. Oversight is a quaint idea to the ‘modern’ public service.

Hefty financial cost

New evidence uncovered by MichaelWest.com.au indicates that the privatisation is ripping us all off. Taxpayers are paying massive premiums to handball existing public service staff on to the payrolls of private companies.

One document we found showed a private staffing firm was paid $133,000 to buy an outsourced staff member for one year. The usual salary for the role was only $65,000. The difference in price was pocketed entirely by the labour hire firm.

When asked for comment, the staffing firm insisted the $130,000 figure was more than the true amount paid, but provided no evidence to contradict the documents or the procurement listing on AusTender.

These rip off contracts are the tip of an iceberg of graft. The industry standard premium of the labour hire industry is a 12.5% top-up of pure profit, after overheads and costs such as payroll tax expenses. The true margin between what private firms are being paid and the average public servant is getting is often 20 to 30%.

Much of this is money for nothing. Taxpayers pay these premiums even when ‘staffing firms’ don’t actually do any recruitment work. Roles advertised on government job boards are being hand-balled to private staffing firms after candidates achieve a successful interview. This is a known practice at many major government departments. Disclaimers that a successful interviewee will be put on to an ‘agency contract’ are even visible on multiple APS jobs ads as of today.

Private staffing firms have been unable to explain why they are receiving buckets of pure profit when they haven’t even done the work of finding a recruit. Some have claimed it is justified by them charging for a ‘payroll service’, which is ridiculous as most government departments already have a payroll team. It is a rort.

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There is no transparency to these arrangements. Requests by this site under FoI for the amounts paid to private staffing firms have been repeatedly rejected. Reasons given have included claims that contractor pricing is private business information despite it being public money.

What’s being outsourced?

MichaelWest.com.au has conducted a Freedom of Information project to ascertain what kind of work is being taken off-book by the government. We sent to each major government department two simple questions; ‘what are your outsourcing headcounts, and what are the types of positions you have outsourced?’. This is what we got back.

Department of Defence

Defence has 29,000 outsourced roles while it has 17,000 regular public servants. The outsourced staff number 1.5 times the number of true blue public servants. Some 8,000 of the outsourced roles are in Materiel maintenance while the other 20,000 appear to be regular public sector roles.

Spouses of senior defence officials have been given contracts to supply these outsourced roles even while those officials still were employed at the army.

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Department of Agriculture

This department outsources 830 jobs, with roles include assistant directors (13), biosecurity officers (13), policy officers (20), project managers (13) and executive assistants, among others.

One wonders what the premium paid to private staffing firms is for the 13 privatised assistant directors at the department.

Administrative Appeals Tribunal

It outsources 114 public service roles. Outsourcing includes senior executives, member associates, senior managers, and other officers.

This is in addition to hundreds of interpreters, security guards, and IT contractors who are off the employment rolls.

Attorney General’s Department

The Attorney General’s department spent $13.4 million on labour hire contractors last financial year, but keeps no formal records which roles are being outsourced.

Department of Home Affairs

Home Affairs outsourced 1,082 positions last financial year. The outsourcing included; intelligence analysts, legal officers, border enforcement officers, policy officers. 

Department of Industry, Innovation & Science

The department has outsourced 250 positions. Roles include many assistant directors, business analysts, grants officers, and project managers.

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Department of Infrastructure

Nearly 40% of the Department of Infrastructure’s staff is outsourced. True blue public servant numbers are at 373, while labour hire accounts for 151 positions.

Some sixteen assistant directors are privatised. Among the other outsourced roles are senior jobs as policy officers, grants officers, and project officers.

Department of Prime Minister & Cabinet

About 10% of the DPMC’s workforce is outsourced, but no records are kept as to the types of roles these are. The document we received gave the job title of 190 workers as ‘contractor’, without further description.

.Australian Taxation Office

Some 5,300 roles are outsourced by the Tax Office, 5,000 of which are referred to as ‘overflow’ positions; apparently call centre workers. Some 300 outsourced roles are in the regular public service; among these roles are debt collection officers, law interpretation officers, accountants, and project managers.

Department of Veteran’s affairs

Veteran’s affairs has outsourced 321 public sector positions. Outsourced roles include assistant directors, ministerial delegates, parliamentary officers, and senior managers.

Departments refusing to provide records

The TreasuryEnvironment, and Education departments refused FoI requests asking for the same information. The departments don’t appear to keep a record of what kinds of roles are being outsourced.

AusTender records indicate that large amounts of staff procurement is occurring at these departments, despite a lack of records being kept.

Human Services refused to waive fees associated with our FoI requests for staffing records. It is known that the department has an extensive privatised workforce, including most notably; a large number of debt raising officers employed through Hays Recruitment.

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ABOUT THE AUTHOR

Geordie Wilson

Geordie Wilson

Geordie Wilson is a long-time friend of MichaelWest.com.au, having contributed to the site’s reporting on the Banking Royal Commission, and other topics. He holds a JD from Melbourne University and is due for admission as a solicitor in 2020.

17 Comments

  1. Avatar

    Can MW report on the NDIA? Would be helpful. From what I have seen the problem is the staffing cap.

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      I had reason to go to Social Security office recently to claim a medicare fee. The “service” was appalling….”please take a seat sir, and wait to be called”……

  2. Avatar

    Here we have the fascist LNP abusing a draconian and (once) rarely used “Curtailment of speech” ruling to effectively MUZZLE free speech and the rights of the Opposition to speak out AGAINST the growing lack of democracy, ineptitude and escalating corruption of the disgraceful Morrison regime! This ruling was initially only meant to end a long, rambling and repetitive speech but now, ever since time restraints have been placed on political speeches in Parliament, this draconian ruling was rarely, if ever, used – until NOW! How has it happened that this appalling LNP regime managed to warp and twist this ruling so that they are able to immediately shut down any form of justifiable criticism and/or democratic debate in our Parliament? Shutting down free speech is one of the first RED FLAGS of fascism!

    The LNP have also infiltrating the Board of the ABC (and panel shows on the ABC) by ensconcing right-wing sycophants on the Board, news programs and panel shows to ensure that Australians only hear and see what THEY want us to hear and see! The control the LNP/Murdoch/IPA Alliance now holds over OUR taxpayer-owned ABC has been a worrying, growing trend going back to John Howard. The LNP and Murdoch rags are also as guilty of what they do NOT report as the lies, never-ending blame games, character-assassinating attacks and right-wing propaganda they DO report. It can no longer be denied that the LNP/Murdoch/IPA Alliance have already taken over and manipulated every free-to-air channel in the country!

    Anyone who was foolish and Murdoch-manipulated enough to vote for the LNP should remember that they voted for a power-obsessed megalomaniacal right wing extremist who has proven to be every bit as dangerous as Trump and who is now turning our (once) egalitarian nation into a fascist dictatorship.

  3. Avatar

    This is one of the appalling things that are happening right NOW whilst our attention is being deliberately diverted (by the ruthless dictator, MorriScam) with Covid-19. The ruthless ongoing privatising and selling-off EVERYTHING taxpayers (once) owned to the highest bidder, many of them FOREIGN-OWNED corporate predators for the sake of a quick, short-term profit that will be wasted and expended on stupid, ill-planned schemes and providing benefit to their multi-millionaire cronies in the Top 1%. One thing is for sure, ordinary working- and middle-class Australians won’t see much of the profits absconded by the LNP from the sale of OUR resources and services.

    This massive, short-sighted sale of everything Australians cherish includes more than 10% of our rare, precious WATER in the Murray/Darling system to CHINA a country that has described Australia as “dirt under their shoes” !!! The unspeakably stupid decision to hand over more than 10% of our water (and WHO the hell is policing this?) to China to use to water THEIR crops, on OUR land (leased to them for a pittance) then have all those crops EXPORTED back to China without one single benefit to our hard-working farmers, in the DRIEST inhabited continent in the world with a long, hot drought-filled summer on the horizon – is BEYOND evil and a criminal betrayal to desperate, struggling rural communities along (and beyond) the banks of the Murray/Darling River system!

    The damage, environmental vandalism, destruction, escalating self-serving corruption, nepotism, idiocy and growing levels of fascism by the Abbott/MorriScam regime is terrifying! What have we become? What type of FUTURE will our children/grandchildren have under the right-wing extremists in the LNP who are overflowing with despotic, morally bankrupt, self-serving miscreants and bible-thumping Hillsong-cultist hypocrites!

    In the meantime, this is what the LNP are doing in the background to whittle away our democratic rights! … see below …..

  4. Avatar

    Writ large at universities too. Endless consultants being used to do what is supposed to be senior management’s job!! Everything from hiring VC’s (we’ve seen what that achieves) to what a university should call itself. Should we call ourselves the University of Corporate Idiocy or Corporate Idiocy University? I know, let’s pay a consultant company several $100,000 to advise us. And again for the logo, letterhead,…..

  5. Avatar

    I’ve watched a state taxation office employ, first as advisers, than in executive positions, members of law firms that have been enablers of protagonists and tax evaders for decades. The proper role of the public service has been completely eroded/white-anted.

    • Avatar

      Yes the role of the public service is to serve themselves.

      • Avatar

        It’s called “Snouting the trough”…..

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      Yes, back in the day, the Chief Justice of the High Court, who ultimately ruled on the legality of tax-avoidance schemes (as in ‘scams’), was Sir Garfield Barwick, who for many years had a lucrative earlier career advising companies on tax avoidance schemes.

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        Thus there are calls for a Federal ICAC, which, I fear, will never happen….

  6. Avatar

    Well done Geordie, this has been going on for a long time, I’m trying to think of a Govt project that has gone well in recent years…nope, not one, the Subs are the prime example of consultants being in charge of outsourcing, snouts in the trough as far as the eye can see. There is a deeper layer to this too. Industry bodies fuel the consultants with an infinite supply of red-tape, they manipulate Australian Standards to ensure firms have to keep paying for new certifications and buying consultancy services to keep up. It’s a perfect Ponzi, pushing up prices in the name of IR, HR, Enviro, Safety & Quality Compliance and shoving risk down to the lowest player on the ladder. The legal (sorry Geordie, but we’re all Rentier at the end of the day) finance and insurance cartel parasites are up to their necks in it because those golden eggs just keep coming. There might be cracks appearing though, the insurance industry’s reaction to the flammable high-rise debacle shows the cartel can only stand so much, but the other tentacles, defence, health, transport etc… keep squeezing.

  7. Avatar

    Privatisation is a result of our membership of the W.T.O. Both Liberal and Labor State and Federal Governments are complicit in this action.

  8. Avatar

    But when the ALP during an election campaign warned people that the LNP planned to privatise Medicare, this was called an untruthful scare campaign.

    Thanks for this article, Geordie – depressing, but essential reporting. Won’t be long before this situation reaches the ridiculous point it has already reached in the US, where the US Army had to pay a private contractor to write the Army’s manual on how to deal with private contractors.

  9. Avatar

    One could argue that outsourcing (and employing libertarian ‘wrecking crew’ aka Tom Franks) requires permanent, middle management internal enablers for indirect support, while gaining indirect benefit for the enablers? While US style radical right libertarians influence and wish to dramatically decrease the size of the public sector, costs and taxes, it ultimately rewards them with contracts and rewards from their corporate and/or ideological masters who can operate with looser policy constraints.

    However, many PS long term permanent ‘insiders’ are guilty in being complicit and acting similarly for present or later gain, tangible and/or intangible.

    Can be observed in most sectors and/or departments amongst generation of baby boomer middle management whom return to work after (first official) retirement at 55+, on contract, and starting a new or added superannuation scheme (even better, contracting back in as a consultant). Another is employing external consultants or related to bypass institutional knowledge that may preclude desired external policy objectives, and also exclude a department’s own personnel to apply and/or develop their own expertise and skills, for the future. Further, younger personnel are held back by older and more senior middle management clogging up arteries, while even younger prospective personnel for low level positions cannot expect permanent employment but offered casual positions via a register (possibly managed by a labour hire firm).

    One wonders how many former middle and/or senior PS personnel work for the external consultants and contractors? How many PS insiders/enablers in middle or senior management (past early retirement age), if not allowing, but passively observing this hollowing out as they expect a quiet life in final years of employment while they ‘top up’ their super to maximise retirement income (like most Australians worshipping their own prosperity)? Or worse, don’t know what to do with themselves in retirement…..

  10. Avatar

    Attention to how effectively our system of governance is working is logically the highest priority. Isn’t it?

  11. Avatar

    Outsourcing Government business to private enterprise is the thin edge of the wedge. Once it is in the hands of private enterprise(ie BIG MONEY), the IPA will have even more power over the LNP than they have now(As well as Labor, when and if they regain office)
    The American Political system has been totally corrupted(Thanks to President Reagans call for Government to “Get Out of the Way”) by the “Revolving Door Guys”, and now they control the American government, by “The Power of Big Money”……..
    Don’t let it happen here.

  12. Avatar

    As Government cannot bind Government there is a case for a new Government to review all contracts made to the friends of past Governments and where those contracts are in conflict with accepted practice, abandon them without compensation.

QED

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