Monday, 15 June 2020
Private Members' Business
Public Service Contractors
That this House:
(1) acknowledges that:
(a) an effective public service relies on skilled public servants who have fair and equitable conditions of employment and job security;
(b) the Government's arbitrary average staffing level (ASL) policy is:
(i) driving privatisation as it forces agencies to outsource their core functions;
(ii) causing a blowout in spending on contractors, consultants and labour hire; and
(iii) leading to a hollowing out of the public service; and
(2) notes that:
(a) the Australian National Audit Office Information Report No. 19 of 2017-18, Australian Government Procurement Contract Reporting, indicates that in 2016-17:
(i) Government spending on consultants was close to $700 million, up from around $380 million in 2013; and
(ii) "the big four" had 1,617 consultancy contracts worth $502.1 million since 2012-13;
(b) more than $400 million has been spent on privatising Department of Human Services call centres, including a $135 million contract for Stellar Asia Pacific, $132 million to Concentrix Services, $120 million to Datacom Connect and $36 million to Serco Citizen Services;
(c) the National Disability Insurance Agency:
(i) recorded a 600 per cent increase in consultants and contractors over two years—from $70 million in 2016 to $430 million in 2018; and
(ii) has previously stated its staffing levels would be 10,595 staff in 2018-2019—this is now capped at 3,230 in the 2019-20 budget with core functions such as local area coordinators outsourced; and
(d) the Government's billion dollar plan to privatise Australia's visa system will lead to increased visa costs, data and national security risks and job losses; and
(3) calls on the Government to:
(a) abolish the arbitrary and damaging ASL policy;
(b) ensure that workers doing the same job get the same pay to stop the use of labour hire from undermining the pay and conditions of existing workers; and
(c) end the secrecy on government spending on contractors, consultants and labour hire firms.
I am very pleased to be able to raise in the parliament this evening this important issue about the Australian Public Service, particularly at a time when we are starting to put our minds towards what sort of country it is that we want to build for the future in our nation in this post-COVID-19 world. COVID-19 has demonstrated that, when the will is there, big changes can in fact be made, and that this can happen very quickly. It's also demonstrated the importance of a strong, responsive public service.
Let's be clear, the Australian Public Service, or the APS, is a world-class body, staffed by professional men and women that have delivered unparalleled quality, expertise and value for money to Australians for decades. But, rather than recognising the value of this accumulated expertise and experience, this government has set about tearing it down, piece by piece, through a sneaky campaign of privatisation by stealth. A plan to shrink the size and capacity of the Public Service and to transfer work to the private sector has been underway for some time. Just think about the ill-fated attempt to privatise the visa system, which saw Liberal Party donor Scott Briggs lead a bid to run a $1 billion system. If this had proceeded, it would have imposed an immense risk to our national security and undermine sovereignty around our borders.
But there are other less obvious things that this government does every day to undermine and fundamentally weaken the APS. They are things like driving down pay and conditions, slashing permanent contracts and replacing them with casual ones, and forcing public servants to go without pay rises for years. All of this demonstrates the grave lack of respect the government holds for APS workers. It makes people think twice about taking up or indeed staying in APS jobs.
Another severely damaging practice has been staffing caps—unrealistic and arbitrary limits that the government has placed on how many public servants can be hired, regardless of actual need. Of course, this hasn't reduced spending, because the work still needs to be done. Now agencies are just being forced to outsource their core functions to the private sector instead of building in-house experience. This has seen government spending on consultants climb at a breathtaking rate. For example, the NDIS alone registered a 600 per cent increase in consultants and contractors in only two years. This is staggering. With spending on the big four consultancy firms nearly tripling under the Liberals, it is no wonder that the Australian Financial Review ran a story in May last year titled, 'Consultants breathe a sigh of relief over coalition victory.'
We've seen a similarly damaging explosion in the number of labour hire workers employed, as agencies have had to go to the private sector for staff to fulfil their basic responsibilities to the Australian people. Indeed, the Auditor-General has revealed that the Liberals have spent over $2 billion on outside contractors since they came to power. Just let that sink in for a moment: $2 billion on outside contractors. Again, far from saving money, this puts a heavy impost on the budget, with evidence to the APS review indicating that contractors actually cost 40 per cent more than permanent employees, despite being paid less. The difference, of course, goes directly to the bottom lines of private labour hire companies. We have also seen great swathes of the public service carved off and handed over to private companies to run, companies like the multinational Serco, which is best known as an operator of prisons and detention centres. What is less known is that they are the official employer of more than 10,000 APS workers.
If there is anything we've learned after the years of failed neo-liberalism experiment, it's that privatisation almost never works. All it delivers to the APS is buckling, conflicted services, ballooning deficits, a rapidly shrinking base of in-house knowledge and experience, and a country that is increasingly beholden to private companies.
It won't shock you to find that I oppose this motion. It is a great privilege to be able to stand up and give a speech on this motion, because it seemed for a while that the opposition wasn't going to support their own motion. But truthfully, I'm glad that the member for Bruce has done so, because it gives us an opportunity to address some of the fundamental problems coming from the member for Newcastle. The member for Newcastle ended her speech by saying that the neo-liberalism bogey man experience has come to get everybody, and that there is no benefit to actually making sure that institutions can actually be run by the private sector. I was asked recently, rhetorically I might add, in an article whether there has ever been a bigger capitulation, in terms of public policy in Australia. Somebody was using a particular example. I highlighted to them that yes, there was, against ideology, and it was that the Labor Party, the party which is committed to the socialist objective, was the one that privatised Qantas and the Commonwealth Bank. Don't get me wrong: I think they got it right. But according to the member for Newcastle, they got that wrong. This is why they can no longer claim the mantle of the Hawke-Keating legacy, because they are even abandoning the idea that they think that a private bank is a good idea. Maybe they are digging former Prime Minister Chifley from the grave and trying to resurrect the idea that everything should be nationalised and banks should be taken into public hands.
An honourable member: Food production!
Exactly! My knowledgeable colleague makes the point that there are services that are so critical that they cannot possibly be run by the private sector. Food and agriculture is a classic example. But actually we know that when food is put into hands of the socialist means of production, it doesn't lead to bounty; it leads to bread lines.
An honourable member: Come on, Venezuela!
Yes, Venezuela. Their great success story in oil is one of many ways to bankrupt a country. This motion is a farce from beginning to end. In fact the motion itself almost makes me want to look up parliamentary practice and House practice to understand what the formal definition of 'misleading the parliament' is.
Here is the reality: the Commonwealth supports a number of public servants to do a job to enable the government to do its job and to assist the people of Australia. It is an entirely reasonable thing to do. Of course, you don't need to constantly increase the number of public servants in perpetuity. There are entirely reasonable, logical reasons that you would outsource activities, because skills or knowledge might sit outside the public service. Believe it or not, an all-knowing, perfect government does not exist. We might have division of labour. We might realise that there are advantages, because some skills may only be needed for a short time, or you might be able to purchase certain types of contract. The logic of the opposition is that the government should essentially do all because in the end those skills must rest within the public sector.
Instead, this government looks at taxpayers' money, makes rational, reasoned decisions about what is best value and what will enable the public service to do its jobs properly and deliver for the people of Australia. So we don't believe in the unending increase in the public service. We agree in it doing its job well and resourcing it well to deliver for the people that we are all elected to represent and serve. So we take a very pragmatic approach, but it doesn't work for the ideologues on the other side of this chamber.
Let's face it, today's modern Australian Labor Party simply does not represent working people. Today it is the party of public sector workers and organised capital, and that is the basis of everything they fight for in this chamber. You can talk about tradies these days and, frankly, the Labor Party won't say a word. Independent contractors? They're not interested. But start criticising or saying there should be some sort of constraint on the Public Service and watch the outrage. If you really want to see them angry, just ask them about industry superannuation. They will lose their nut, because, in the end, they only represent their own interests. They're only representing the people who pay for the memberships, and in Victoria today we've seen just how extensive that patronage network and their voter motivation is. (Time expired.)
I'll say at the outset that the government's ongoing cuts to and privatisation of the Australian Public Service is undermining the quality of services to Australians: to people who can't get a consistent NDIS plan in any kind of sensible time, because they are all labour hire contractors; to people waiting for their age pension claim month after month after month because Centrelink doesn't have any staff; to people who are wondering how the once competent Public Service could make a $60 billion stuff-up. It's because there are not enough sensible human beings left checking the work. My personal favourite under this government is the visa and citizenship processing. You tried to privatise the $1 billion system to your Liberal Party mates, but you abandoned the tender and wasted $92 million of taxpayer money! Ninety-two million dollars cash: gone on a failed tender trying to get rid of public servants. Australians are sick of privatisation and they're not buying it anymore! I want to put some facts into this debate and actually set out how the government is doing this. It's all being driven, fundamentally, by arbitrary caps on the Public Service, which forces privatisation by stealth—even where it's proven to be cheaper to do the work in-house or build capability in-house. It's no accident; it's a deliberate agenda to cap staff numbers and force the privatisation.
We heard from the previous speaker, the member for Goldstein, that it's 'reasonable and logical'—he used his 'reasonable' voice—that, since coming to office, the Liberals have cut the number of public servants by 18,000. That's a 10 per cent cut in raw numbers, which is bad enough, but in real terms Australia's population has grown. So with a growing and ageing population and a growing demand for public services, instead of meeting this demand, the Liberals cut and privatise. Why? There is no reason. The only reason the government has ever given for this number is that it was the number when John Howard left office. That's it. That is the reason for the number, a magical golden era. Thirteen years on, since 2007, Australia's population has grown by five million people, or 23 per cent. But if we look at the number of public servants per person in Australia, a per capita proxy measure, it's a cut of 22.1 per cent in real terms under the Liberals formula. It's deliberate.
There are two ways this is happening, this privatisation. The first way is that the staffing caps force outsourcing to temporary casual labour hire firms. The Auditor-General recently revealed more than $2 billion blown on casual workers because of the staffing caps. The explosion in the spending on labour hire firms raises serious value-for-money and probity questions. We proved this through the Public Accounts and Audit Committee last year. We had departments in here saying it costs us 40 per cent more to hire the IT contractors for years in the ABS, and they're only wasting those millions of dollars of money because this bloody government's ideology—
I withdraw. The government's ideology of privatisation is driving this waste. They pretend it's a competitive process, but the data is very revealing. There are these magical, opaque little panels where you get on the government's mates list, through the process, and then departments can buy from you. One lucky company got almost half of the $1.1 billion spending spree on recruitment firms. One! And 11 lucky firms scored more than 80 per cent of $1.1 that billion spending, although there were 61 companies on the magic list. More than $4.2 billion was awarded through 10,000 individual contracts, which were awarded past the panel's end date, breaching all the procurement rules.
The second way that the government's rorting this and privatising the Public Service is through outsourcing non-consulting work to the big four expensive firms. There has been an explosion of contracting, worth billions of dollars, to the big four consulting firms over the last few years. The graph is almost exponential. But, interestingly, a decreasing percentage of this work is actually flagged as consultancies on the government's tender system, so that means one of two things: either they're covering it up and departments are not flagging this work as consultancies, because they don't like all the articles showing the blowout in consultancies; or, I think more likely, the staffing caps are forcing departments to contract out low-value work, which should be done more cheaply in departments. We've proven this. It should be done more cheaply. The government says: 'We're the small-government people. We hate waste.' No, you hate public servants. You want to privatise all this work, at greater cost, to the big four and these labour hire firms. Why? There is no reason except mad ideology.
COVID-19 has triggered a deep nationwide reflection on big issues: rebuilding our national capability and the overcasualisation of work. The UK and the US are further down this privatisation road, and their responses have been disasters. The case for rebuilding the public sector is overwhelming.
It's very interesting to follow the member for Bruce on a day like today, but I'm sure if I was a Labor member in Victoria I would be screaming at the top of my lungs—anything I could do to divert the attention from the Trotskyists versus the Leninists fight that we are now seeing down there in Victoria. So even though the member for Bruce may have been very loud and may have been very agitated and may have been very excited, there is a reason.
Let's just get to the facts of this debate. Let's look at the facts that completely debunk the entire premise that the Labor Party are coming in here with today. The 2019-20 Budget Paper No. 4 shows that the overall cost of government administration, which includes public sector staffing, consultants and contractors, as a proportion of overall government expenditure has decreased from 8.5 per cent of the first year of the Labor government in 2007-08 to seven per cent. So we're getting more resources for less cost. The suggestion that consulting is somehow at record levels is simply not borne out by the facts or the evidence.
The recent ANAO Australian Government Procurement Contract Reporting Update provided a broad analysis of AusTender data over a 10-year period, from 2009-10 to 2018-19. Page 43 of that report said:
The nominal contract value under the consultancy code reported in AusTender in 2018-19 is broadly the same level as it was in 2009-10.
In real terms, the 2018-19 value of a consultancy contract is $91.6 million lower than the 2009-10 value. Furthermore, the annual value of the consultancies on AusTender as a proportion of the total value of contracts has remained relatively stable at approximately one per cent since 2011-12, having fallen from 1.6 per cent in 2009-10. These facts simply dispel the myths behind this entire motion. What we have seen here today is an attack on the private sector.
There are some very interesting numbers. The latest Australian Bureau of Statistics catalogue No. 6302 on average weekly earnings looks at the difference between public sector wages and private sector wages. You would have thought that those in the private sector would be paid more because they have more risk, but, no, in November 2019, the date of the last ABS report, full-time adult average weekly ordinary earnings were $1,812 in the public sector compared to $1,617 in the private sector. So, if you are working in the public sector as compared to the private sector, you are being paid 12 per cent more than the private sector. Yet, the Labor Party come in here and want to attack private sector workers that pay for our public sector. That is without looking at the greater risk that private sector workers have, which we have seen during this coronavirus pandemic—the restrictions and the lockdowns.
The ABS numbers also show that in April alone 220,500 full-time jobs were lost because of the coronavirus. You could fill the MCG twice with the full-time jobs lost because of the coronavirus. How many of those were in the public sector? I would say virtually zero. It is the private sector that has worn the full hit on this. Additionally, there are another 373,800 part-time jobs that were lost in the economy in April alone. Again, the vast, vast majority of those were in the private sector. So, it is disgraceful to hear the Labor Party coming in at this stage of our economic history and making these attacks upon the private sector during a private member's motion that has no factual basis whatsoever.
I rise to support this very important motion. Recently, the Treasurer suggested that the next election will be fought on the role of the government. Well, if this government has its way, there will be a public service so denuded that there's not much left to deliver any policy agenda, let alone for there to be a proper role for government. Much of this is because of the arbitrary ASL cap, an increase in outsourcing, with $2 billion spent on casual workers, and a commitment to using consultants instead of building up the capacity of our public service. Under this Liberal-National government, nearly 18,000 jobs have been cut from the public service since June 2013. Some 2,270 people lost their jobs from Services Australia in the last financial year alone. Nearly 4,000 full-time staff in roles at the ATO have gone since the coalition came to power. Cuts to Australia's Border Force patrols have occurred to save on fuel. There have been nearly $150 million in cuts to research funding for the CSIRO and other scientific agencies. The Bureau of Meteorology's local forecasting services have been cut and its budget reduced by $46 million over the next three years. Over 250 government bodies have been abolished, including pretty important bodies like the National Preventive Health Agency and the National Water Commission. The coalition has also tried and failed to abolish important agencies like the Office of the Australian Information Commissioner and the Australian Renewable Energy Agency. Of course, we also had the coalition's attempts to privatise visa processing.
Under this government there has been a blowout in waiting times for the National Disability Insurance Scheme. There has been a blowout in waiting times for aged-care home packages. Core wait times for child support agencies have increased, and 48 million calls to Centrelink went unanswered in 2017-18. Of course, in my part of the world, the government tried to close the Mornington Centrelink and Medicare office and then had to extend it for six months when they saw the queues down the road as a result of the pandemic.
Of course, we know that there has been $200 million in cuts to the ABC and SBS, and over a thousand ABC staff members have had their jobs cut. This matters. The ABC matters in Australia. It is a public institution and a public service. Don't just take it from me; take it from Grant Coward, who lives in Seaford. This is from an email that he sent me and is more than happy for me to read out in the parliament: 'The following comments, if I may, are directed to the Liberal-National government in relation to the ABC. Stop emaciating the ABC and elect a board in which the country can have confidence. The $1.1 billion spent by Australian taxpayers is money well spent. Out of the $400 billion 2018 tax revenue received by the Commonwealth, spending of $1.1 billion on the ABC—
Mr Pasin interjecting—
I'm sorry, a member of the government is currently heckling Grant Coward, a constituent who is having his views put to the parliament. That's the view they have.
Thank you. As Mr Coward says:
… spending of $1.1 billion on the ABC represents a comparatively minuscule amount of just over one-quarter of one per cent of Commonwealth revenues, and it's worth it. Who in the commercial world, with all free-to-air stations complaining of declining revenues, is going to produce quality programs like Four Corners, Foreign Correspondent, 7.30, Insiders, Australian Story, Q&A, Gruen, Catalyst, The Drum, The Business, You Can't Ask That, Landline, Back Roads, Home Delivery, Matter of Fact and many other quality programs, including the regular news? Are commercial stations going to welcome another entrant into the commercial scene, further diluting the revenue to each station?
Mr Coward thinks not. Further reducing the ABC's budget, or even a partial sell-off—do it at your electoral peril. That's the message to the government from my electorate.
The public institutions matter, and the Public Service matters. It's about the quality that is delivered to Australian citizens, and we are not going to stop fighting for them.
I rise today to speak about the average staffing level offset rule, or staffing cap, and the impact it is having on our Australian Public Service and our nation. Constituents who work in the Public Service regularly tell me they feel undervalued by this conservative government. And why wouldn't they? Since the coalition was elected, they have cut 18,000 jobs, including 8,722 jobs in Canberra. The government goes on about the need to relocate government departments and public servants to the regions, but in actual fact they have cut over 1,600 jobs in the regions they claim these jobs need to go to.
I want to thank the member for Newcastle for bringing forward this motion. This isn't just a Canberra issue; this is a Morrison government policy that affects every Australian, from Newcastle to Canberra, Perth to Hobart. It affects every Australian because it is one of the key handbrakes on the effectiveness of the Public Service, and a handbrake on the effectiveness of the Public Service means a handbrake on the effectiveness of the government services that all Australians rely on.
As the member for Newcastle identifies in the motion, the staffing cap means that instead of 10,500 staff working to deliver disability services to Australians accessing the National Disability Insurance Scheme, only 3,200 staff are doing this work. Key work of the scheme, such as interviews to establish what participants need to live lives of choice and control, are outsourced. Key strategy work is outsourced. NDIS participants keep appearing before the Joint Standing Committee on the NDIS, a committee on which I serve, to tell us that their plans don't reflect what they have requested in their interviews, and that the NDIA processes and systems demonstrate a lack of firsthand experience in the disability services sector. NDIS participants are experiencing firsthand the lack of institutional knowledge, training and experience that outsourced workforces typically deliver. Every member in this place must be hearing that about the NDIS from their own constituents.
As a former public servant myself, I can tell you there is no other place in Australia where you get to do the broad spectrum of work you will do in the Australian Public Service. This is rewarding work in the service of our nation, and I have never worked with a group of people more hardworking, professional or dedicated to the good of our nation. But when the government decides to pay double for this work by outsourcing to consultants, it creates a serious brain drain in government departments. Not only that; it creates incentives for public sector leaders to outsource complex and innovative work to consultants, because it also outsources the risk and isn't subject to the APS values and integrity standards. It raises the question of a massive Morrison government bungle such as the illegal robodebt scheme happening because of the brain drain in our Public Service.
As recession creeps in and unemployment increases, there has never been a better time for the Commonwealth government to ditch the damaging APS staffing cap, hire more people and let public servants do the type of work that they are spending big bucks getting consultants to do. The government certainly can't argue they don't have the budget to do this. Since the coalition came to power, the eight biggest consulting firms are now getting $1.1 billion a year in contract—double what they were getting when the cap came into place. $1.1 billion. It is probably more than a billion dollars. Labor has had to piece together, through the estimates process, through questions on notice, through the Audit Office and other government reviews, the number of consultants and contractors currently employed in the APS. Despite a huge amount of reporting by the Australian Public Service Commission, there is no authoritative single stat on the number and expenditure by this government on consultants. However, even publicly available documents, such as the David Thodey APS review released in December point out:
Labour contractors and consultants are increasingly being used to perform work that has previously been core in-house capability, such as program management.
There is no rationale for this. We should be building up our Public Service capability; not eroding it and wasting money. Because the number of consultants working for the APS is not counted and expenditure on consultants is inconsistently collected, it says:
This makes it difficult to assess the value of external providers relative to in-house employees or to infer the effect on APS capability.
This is from a private sector leader.
The government needs to lift the damaging APS staffing cap. It is damaging the Public Service, adversely impacting the services Australians rely on, and the costs are out of control.
I also rise to speak in favour of this motion, and I thank the member for Newcastle for bringing this issue to the attention of this chamber. Sadly, I note the lack of government speakers on this motion on the importance of an effective Public Service. This may be because since coming to power the coalition has slashed nearly 9,000 jobs from the capital region alone. This may be because the Morrison government's arbitrary cap on the number of public servants has forced government agencies to use labour hire to meet their key resourcing requirements, even if it would be cheaper and more effective to do the work in-house. Maybe members of the government are not here tonight in numbers to defend their record on the Public Service because, as we know, they are sick of experts. It's the simple premise that departments should not be forced to spend billions of dollars of taxpayer money on expensive external labour hire firms when they could be doing this work themselves.
The COVID-19 pandemic has shown the Australian Public Service to be a valuable but under-resourced source of expertise and essential services, yet the COVID Commission is a simple example where the government could have utilised senior leaders from across the public sector rather than appoint a group, with the exception of one, compromised by their approach to conflicts of interests. I concur with former departmental secretary Renee Leon, who highlighted this government's devaluing of expert advice and over-reliance on consultants, neglecting Public Service expertise in favour of external views that were more a testament to the wonders of the marketing of consultants than the greatness of the product they produce. Her contribution should be a wake-up call for anyone who is interested in evidence based decision-making and good governance. The member for Newcastle's motion highlights just how far we are down this road. Government spending on consultants increased from $380 million in 2013 to almost $700 million in 2016-17. Privatising Department of Human Services call centres cost over $400 million. In just two years, the NDIA had a 600 per cent increase in consultants and contractors, with the 2019-20 budget capping staff again.
The devaluing of expertise and the outsourcing of public sector advice is not news to me. For more than a decade, while I worked for Professionals Australia, the science and engineering union, I appeared before Senate inquiries and met with government agencies to put on the record concerns about the consequences of the erosion of science and engineering expertise across governments at all levels. Australia's Public Service has undergone a dramatic shift in technical, engineering and scientific capacity. Governments employed about 100,000 engineering professionals across all levels of government three decades ago, yet now there are fewer than 20,000. Within Defence, a failure to address recurring recommendations to rebuild in-house skills has led to significant costs blowouts and loss of significant material capability. Without technical capacity, governments can neither manage nor assess what the private sector sells them. They have effectively become cashed up, uninformed buyers. Given this, concerns around the Future Submarine program should not be at all surprising.
Last year, The Canberra Times reported that the big four consultancies alone nearly tripled their income from the federal government, to over $2 billion since 2013. There is a reason why they colloquially call the government 'the dairy'. At the same time as this surge in the use of consultancies, there has been a significant increase in the use of labour hire and contracting arrangements to perform business-as-usual roles that are indistinguishable from the role of ongoing public servants. The use of these arrangements for business-as-usual roles undermines the capacity of the Australian government to build policy and program expertise on an ongoing basis. The government appears to give little or no consideration to the sensitivity of the work, the fact that such workers are not bound by Public Service codes of conduct and that having such a workforce opens the possibility of multiple conflicts of interest into every public sector workforce. The practice runs against the intent of the Public Service Act 1999. It's true that using contractors and consultants can be useful to provide a just-in-time workforce to respond to peaks in workload, but they are not the foundations for a healthy government workforce. Strong government needs to be driven by a skilled workforce motivated at all times by the public good rather than commercial interest.