Outsourcing Government itself: the hidden privatisation of the public service

by Geordie Wilson | 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. (See Editor’s note below)

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.

Editor’s note: A document obtained from an FoI conducted after this story indicates that $85,000 was the actual amount paid for the public servant over 12 months. This contradicts the $130,000 figure listed on AusTender and in tender documents of the Tribunal.  The released document suggests that the staffing firm’s price is was approximately $20,000 higher than would have ordinarily been paid in salary.

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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.

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