Coalition relied on a "shadow workforce" in the APS, audit finds

An employment audit of the Australian Public Service has led Labor to describe an over-reliance on contract staff as a “secret” and “shadow workforce” designed to camouflage the true numbers working for the Federal Government.

The APS Audit of Employment was released over the weekend, revealing that in 2021-22, under the former Coalition government, external employees accounted for 37 per cent of the workforce.

A total of 54,000 full-time equivalent workers were consultants, contractors and labour hire staff, while 144,300 public servants were actually employed in the APS.

Labor says the blowout in external contractors was because the Coalition was pretending to cap APS numbers to look like it was clamping down on public employment expenditure.

Minister for the Public Service Katy Gallagher said the results of the audit painted a true picture of the APS workforce under the former government.

“What we have uncovered is the extent of the former Coalition government’s shadow workforce that was plugging gaps in the APS created by their arbitrary cap on the number of government employees,” the Minister said.

“The Australian Public Service and those who work within it perform a critical role in our democratic system and should be valued by government.”

Senator Gallagher said the former government’s approach undermined capability across the service, leaving many departments under-resourced.

She said the Coalition “went to great lengths to trick people” into thinking important public sector work could be done with a reduced workforce, “which we now know wasn’t possible”.

“The Morrison Government maintained its artificial cap on public servant numbers, promoting a mirage of efficiency, but were at the same time spending almost $21 billion of public money on a shadow workforce that was deliberately kept secret.

“While the Coalition pretended to cap the size of the public service, they were signing contracts by the billions to outsource work that still had to be done.

“Payments still had to be processed, policies still had to be developed and Australians still had to be kept safe.”

Opposition Leader Peter Dutton has hit back saying the period covered by the audit was during the COVID-19 pandemic when more contractors were needed.

“And that was at a time when Labor was recommending that we spend another $81 billion,” Mr Dutton said.

“These are services that were provided to Australians during the course of COVID that were one-off and there was additional expenditure.”

The audit examined 112 APS entities that employ staff under the Public Service Act 1999, but excluded a number of agencies including CSIRO, ABC and the parliamentary departments.

It was found that the most external labour employment type used by entities was what is referred to as OSPs (outsourced service providers), which accounted for 68.9 per cent of total spending.

Contractors and consultants accounted for 27.4 per cent of expenditure and labour hire around 3.7 per cent.

IT contractors and call service staff made up the bulk of the contracted positions.

Key findings of the audit of agencies in 2021-22 include:

• external labour formed almost 54,000 full-time equivalent positions on top of the reported APS headcount;
• the cost of external labour across consultants, contractors and labour-hire contracts was $20.8 billion;
• The cost of outsourcing government work was approximately 25 per cent of departmental expenses; and
• 43 per cent of the total spending on external labour was in the area of ICT and digital solutions, 17 per cent related to service delivery, and 9 per cent related to portfolio, program and project management.

Senator Gallagher said Labor was committed to rebuilding capability within the APS.

“The Albanese Labor Government acknowledges that there is a role for external labour in the APS but where it is used it should provide a clear value add and not simply plug holes created by an ideological obsession to gut the APS,” she said.