ANDREW LEIGH. The false economy of sacking public servants in favour of consultants.Jan 16, 2018
Would you burn $1 of petrol driving to the other side of the city so you could save 50 cents filling up? Would you recommend to a friend that they buy the cheapest printer, knowing it has the most expensive ink cartridges? Do you advise family to save money by not getting the flu vaccine? Of course not. Fortunately, we’re familiar with the idea of a false economy: a saving that turns out to be illusory because it eventually costs you more. Unfortunately, not everyone seems to have cottoned on to what this means for the Australian Public Service. While public service jobs have been decimated, spending on consultants has ballooned. Work that used to be at the core of the public service, like policy development and stakeholder engagement, is increasingly outsourced.
First, a bit of background. During Labor’s last term in office, from 2007 to 2013, the number of federal public servants grew from 155,087 to 166,139. Outside Canberra, the Liberal Party decried this increase as a wanton waste of public resources. The critique insults those public servants who built the national disability insurance scheme, devised a fiscal stimulus package that kept Australia out of recession, and all those who serve Australians daily. It also misses the fact that the number of public servants per Australian fell during these years.
But in Canberra, the Liberals peddled the opposite line. Here, they weren’t railing against a growing public service. Instead, the Canberra Liberals told porkies about how Labor had “cut” the public service. Or was secretly planning to. Or something.
To keep both constituencies happy, the Liberals promised they would cut 12,000 public service jobs, all by natural attrition. Then the heads began to roll, beginning with several agency heads being sacked. Five years on, 152,095 public servants remain. That’s 14,044 job losses.
Not only were these job cuts a broken promise, they also look like a false economy. We’ve seen the Tax Office website crash repeatedly, Centrelink customers waiting on hold for hours and the census failure. Now, a report from the Australian National Audit Office has estimated how much the federal government spent on consultancy contracts established due to the “need for specialised or professional skills”. The audit office found that such consultancy spending doubled from about $250 million in 2012-13 to over $500 million in 2016-17. Appropriately, Parliament’s joint committee of public accounts and audit is holding an inquiry into these troubling findings (submissions close on February 16).
No one doubts there are moments when it’s appropriate for the public service to ask for outside help. If you’re deciding how Australia should respond to the Ebola crisis, it may make sense to draw on people and organisations that dedicate their lives to fighting public health emergencies in developing nations. But the problem comes when outsourcing involves tasks that should be the core responsibility of government. Mainstream policy development, community engagement and strategic planning should primarily be done in-house, not by outsiders.
Get a group of retired public servants together and they’ll often have stories about the moment they were pushed out of their jobs, only to be hired back a few months later on consultant rates. Such an approach costs the taxpayer more and denudes departments of historical memory. As shadow finance minister Jim Chalmers puts it: “There is no point hitting an arbitrary short-term headcount target at the cost of building higher consultancy costs into the budget in the future”.
History, too, can teach us about the value of a strong public service. A few years ago, the Grattan Institute named 10 major reforms over the past generation that underpinned our prosperity. They included Medicare, tariff reduction, national competition policy, superannuation, broadening the income-tax base, and changes to the structure and funding of higher education. The public service underpinned all of them.
If people tell you we have too many public servants, a simple riposte is to suggest they look across the advanced world. The public sector employers 18 per cent of Australian workers, well below the OECD average of 21 per cent. Of course, that figure includes state and local public sector workers. Narrow things down to the federal level, and there are more people working for Woolworths than in the public service.
Between miserly pay offers, job cuts, reliance on labour hire and rising use of consultants, it’s been a tough few years for the APS. It needn’t be that way. Past Liberal leaders, such as Robert Menzies and Malcolm Fraser, recognised that a strong and capable public service is a national asset – no less valuable than our educational institutions, our iconic buildings and our sporting stars.
When natural disasters strike, it is public servants who race to ensure that those affected by floods and fires receive immediate relief payments. When teenagers get into strife overseas, it is to Australian diplomats that they turn for help. Our quarantine officers keep pests out. Staff who administer our income-support system oversee a social safety net that is rigorously targeted towards the neediest.
It’s time we stopped attacking Australia’s public servants, and began celebrating them.
Andrew Leigh is the shadow assistant treasurer and the federal member for Fenner. andrewleigh.com
First published in The Canberra Times, 14 January 2018.