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The Gershon Recession?

By johnboy - 5 March 2009 21

The Canberra Times is all a-twitter with the ACT economy going into technical recession yesterday. This means that negative growth (contraction for those who don’t hate the language) was recorded for two consecutive quarters.

It’s a bit rude when even NSW and Qld are yet to record this economic effort.

This strikes many as peculiar with unemployment still the lowest in the country. Even a recession can just mean the good times aren’t quite as good as they were.

But here in the RiotACT foxhole we took a moment to chill from the incoming fire and consider that our readers in the IT industry here in Canberra were reporting incongruous doom and gloom six months ago while the sun shone on the rest of us.

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21 Responses to
The Gershon Recession?
megaJames 11:05 pm 05 Mar 09

I think the current commonwealth govt is very short sighted.

Contractors – cutting them means they and their families move away from Canberra and take jobs interstate
APS – not offering ongoing workplace agreement improvements means they leave the APS and/or move interstate with their families for better jobs and money
Outsourcers – not offering contracts means they pull out of Canberra and find their business elsewhere and all their local staff and their families go with them

The end result of all of these things is that commonwealth agencies can’t progress any project or fall behind by 12+ months in delivering the govt programs. The ACT local economy gets even worse for the rest of us, including the thousands of small businesses that support and service the ACT.

The hard reality is that it is mostly contractors and well paid APS people that make the ACT economic stay afloat and grow. If the commonwealth isn’t careful they might find it hard to find a decent hotel to stay in or restaurant to it in when they next stay in Canberra whilst working up on the hill.

How about spending the $950 (x 8 million) on keeping the APS growing and employing APS, contractors and outsources (and all the small supporting industries) and let market forces do their thing and get the economies back on track!

peter@home 8:39 pm 05 Mar 09

zig said :

So does that mean the IT industry gets cash handouts when they are in strife like every other bloody industry these days? Somehow I don’t think so.

the it industry just has resellers who disappear. the companies fold, to be replaced by 10 or 20 new startups.

youami 5:37 pm 05 Mar 09

Oops, shocking grammar on my last post… I am usually more particular than that.

youami 5:36 pm 05 Mar 09

AG Canberra said :

Anyone know what is hapopening with Departmental IT contracts? Aren’t many expiring soon?

Ours expires this June – and we haven’t heard boo from our fearless leaders. We do know however that since the current provider went into receivership last year they won’t be getting the gig.

Are Departments still contracting out IT or are they bringing it all back in house?

I work for the company that went into receivership and hasten to add that the people working on your IT contract now work for a different company which bought thsoe contracts and the ACT business. The receivership may have impacted on the ability to be selected for new contracts but certainly doesn’t mean the [new] company and the people who work for it are going away. And believe me, whatever department you work for, you will be sorely miss us! Trust me!

But to answer, if a department does not have IT then yes they will outsource. Outsource can and does work.

zig 4:17 pm 05 Mar 09

So does that mean the IT industry gets cash handouts when they are in strife like every other bloody industry these days? Somehow I don’t think so.

peterh 1:49 pm 05 Mar 09

which is good for the recently sacked contractors. Where will the departments get the staff for the insourcing? from the people shops.

I think that we will see more of an impact as the policies are implemented.

The bet way for small and large ICT resellers to survive isn’t to shed staff, but to look at diversifying your options re services and tin, and reach a high profit srategy that alows you to grow.

The large companies that are shedding staff will find that they will be back, although not in favorable circumstances, as the competitors that are doing well will take them on.

PM 12:48 pm 05 Mar 09

Much of Howard’s PS cuts were superficial, in that work was outsourced ie some people ended up with a job out of it, even if it wasn’t the public service. Now, with these upcoming cuts, there’s no outsourcing.

smee 12:37 pm 05 Mar 09

The Gershon report is bad news for Canberra. The “cut 50% of contracting staff” requirement coupled with the recommendation that departments look at moving functions out of Canberra “to access a greater pool of qualified people” is going to decimate the Federal Gov ICT employment scene here.

Couple that with the punitive 3% efficiency dividend which says departments must save money without cutting functions which in most cases leaves only staffing costs as the variable that can be adjusted and the whole public service is in turmoil.

Well, similar things happened when Howard took office. We managed to survive them and hopefully we won’t go too far backwards now.

poptop 11:39 am 05 Mar 09

Some of it may be wily public servants (and others) deferring discretionary expenditure and socking it away for a rainy day.

I, myself, have deferred gold plating all my bathroom fittings for just this reason.

AG Canberra 11:31 am 05 Mar 09

Anyone know what is hapopening with Departmental IT contracts? Aren’t many expiring soon?

Ours expires this June – and we haven’t heard boo from our fearless leaders. We do know however that since the current provider went into receivership last year they won’t be getting the gig.

Are Departments still contracting out IT or are they bringing it all back in house?

Deano 11:13 am 05 Mar 09

We are seeing a lot of existing contractors being offered APS positions on a ‘non-ongoing basis’ at APS6/EL1 levels. ‘Offered’ in this case meaning ‘your contract is ending and you can like it or lump it.’ The positions are ‘non-ongoing’ in that they are tied to a particular project and when the work runs out then so do you. They are being offered at the APS6/EL1 level because this is where most contractors fit into the organisational hierarchy.

Not a good time to be a contractor or a body shop.

RandomGit 10:18 am 05 Mar 09

In regards to the IT thingy, a lot of outsourcing agreements reached the end of their extension allowance last year. PS Revenge hath been tookerend.

Kramer 10:04 am 05 Mar 09

The Gershon review definitely stalled a lot of Govt spending in the ACT, and saw large numbers of contractors get the axe. In addition, many Govt agencies have been crying poor and offering minimal pay increases in recent renegotiations of workplace agreements.

The best thing the Govt can do now is to offer very large pay increases to all PS employees – would be a much better way to stimulate the economy IMHO 😀

snurp 9:46 am 05 Mar 09

If you want to be technical (and talk around a “technical recession”), then the rule of thumb is two quarters of negative GDP (ie production) growth. What the ACT has experienced is two quarters of negative SFD (ie demand) growth. The production figures for the states are only released once a year, in December.

sepi 9:38 am 05 Mar 09

I think the Fed Govt 3% efficiency dividend (cuts) are probably to blame.

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