Throughout the COVID-19 pandemic communities right across our nation have turned to the government—the public sector—for essential services, support and expert health guidance. The pandemic has proven once again what Labor has always known: a fair and just society needs a strong and effective public sector. The success of the Australian people at managing this unprecedented health crisis, in which they have put the wellbeing of their fellow citizens first, has been supported every step of the way by public institutions and hardworking public servants across every jurisdiction. However, the COVID pandemic has also brought into stark relief the Liberal-National government's flawed and failed approach to managing our federal public sector and its workforce over the past eight years.
The regrettable reality is that, since coming to office in 2013, the Liberal-National government, irrespective of who has been the Prime Minister or Deputy Prime Minister, has been steadfastly engaged in privatisation by stealth of the Commonwealth Public Service. Their record speaks for itself. They cut more than 12,000 federal Public Service jobs before the pandemic hit while simultaneously increasing wasteful spending on expensive consultants, contractors and labour hire firms to do work previously performed more cost effectively by public servants. This is a direct result of the Liberal-National government's ideologically driven approach to the Public Service, which has been exemplified by its commitment to an arbitrary and damaging staffing cap. It is this policy that has made it effectively impossible since 2013 for key service delivery agencies, such as the Department of Veterans' Affairs and Services Australia, to directly employ the APS workers they have needed to deliver the quality services Australians deserve. Because the cap does not apply to outsourced labour, where agencies have needed more workers they have been forced by the government's myopic policies to engage private labour hire firms, contractors and multinational consulting firms, even though it has been proven time and again that it is demonstrably cheaper and more effective to build up in-house capability within the Public Service.
You need look no further for the impacts of this policy than the Department of Veterans' Affairs, which last year confirmed that 42 per cent of its workforce, including more than 50 per cent of its claims-processing staff, were being sourced through labour hire companies. This overreliance on labour hire has delayed and disrupted critical services to our veterans, due to staff turnover and the loss of expertise and experience when temporary employees leave. It's also coming at a considerable cost to Australian taxpayers. Evidence at Senate estimates in March showed that the DVA has entered into more than $141 million of labour hire contracts in the six months to 31 December 2020 alone. We know from multiple agencies that the cost of labour hire is frequently well above the cost of ongoing public servants.
This isn't just Labor's view; it's also the view of the Prime Minister's hand-picked reviewer of the APS, David Thodey.
The Independent Review of the APS headed by Dr Thodey delivered its final report in December 2019, explicitly linking declining APS capability to staffing caps and the increasing reliance on contractors and consultants to perform work that had previously been performed internally. The final review said:
That review unequivocally called for the abolition of the staffing cap and a far more critical approach by the government to the use of non-APS labour to deliver public services, especially the associated costs, yet the government remains stubbornly committed to its staffing cap policy that is driving poor outcomes.
The government has also failed to take any meaningful action to quantify the cost of its use of private labour in delivering public services, let alone take any action to contain this rapidly escalating cost. That's despite finance minister Simon Birmingham telling The Daily Telegraph:
… the government has accepted, after careful case-by-case assessments, including in some areas of new investment such as aged care and veterans, that it is more efficient and effective to use ongoing staff.
So my question to the minister today is: given the Minister for Finance's omission of Mr Thodey's extensive review along with the evidence from the department and experts, are you persisting with a staffing cap policy that distorts agency decisions and costs Australians more? And, Minister, why does the government continue to be wilfully blind to the growing costs of consultancy for work that was previously done by the Public Service?