ServicesAus’ tech delivery ‘run down’ by outsourcing

Services Australia has been “run down” by a reliance on outsourcing and private contractors which has led to substandard ICT delivery programs, the public sector union says.

In a submission to a Senate inquiry into Australian Public Service capability, the Community and Public Sector Union (CPSU) said that under-investment in ICT and an increase in outsourcing had damaged the department’s ability to deliver services for Australians.

“The CPSU is greatly concerned that capability in the APS has been devastated by years of budget cuts, efficiency dividends, the government’s Average Staffing Level cap and the rapid rise of labour hire, consultants and contractors,” the CPSU submission said.

“In Services Australia, core work has been contracted to private providers driven by commercial intent at a cost of over $1.6 billion to the taxpayer.”

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There has been a reduction of 6000 staff at Services Australia in the last seven years, the union said, with permanent employees being replaced by casuals and contractors.

The department’s contracts with labour hire and service delivery partners are worth over $1.6 billion, while consultancy expenditure is expected to hit $20 million in the 2020-21 financial year.

“These are eye watering figures that demand robust checks and balances to see if they bring value to the taxpayer,” CPSU said.

CPSU members have estimated that half of the ICT workers in the Canberra and Brisbane delivery centres are contractors, and insecure employment at the agency is at “unprecedented scale”.

“Services Australia has lost sight of the benefits of in-house ICT development. A lack of career paths for ICT professionals and the government’s bargaining approach have impacted the agency’s ability to attract and retain ICT talent,” the submission said.

“Additionally, the government’s Average Staffing Level cap has driven the increasing use of ICT contractors for both day-to-day and specialist ICT work.”

The Digital Transformation Agency, which is housed in Services Australia, has already spent more than $20 million on “temporary personnel services” in this financial year, across 141 contracts with recruiters and HR firms, as InnovationAus reported.

There is a steep reduction in transparency and accountability when private contractors and consultants are brought in, the union said.

“Valuable funding has been directed to a growing component of insecure workers and to corporate interests to deliver core in-house work. This is driving down the wages and conditions and reducing the employment security of the workers undertaking agency work or engaged by privatised contract call centre providers doing Services Australia work,” it said.

“These corporate interests operate without the same lines of reporting and accountability expected of departments of state, leaving the public with a distinct lack of transparency for the thousands of millions of dollars being expended.”

The Coalition government has “run down” Services Australia through program budget and job cuts, and this reliance on outsourced work, the CPSU said.

Services Australia has listed 31 contracts with labour hire and service delivery firms, with a total value of $1.64 billion. CPSU said these numbers are “staggering and previously unseen” at the agency.

These contracts include $491 million with ADECCO Australia over four years, $145 million over four years with Serco and $121 million over three years with Datacom.

The department should be required to prove that it can’t complete the necessary work in-house before going to outside contractors, the union said.

“The CPSU has been vocal about the phenomenal increase in consultancy expenditure both in Services Australia, and the APS more broadly in the past five years,” the CPSU submission said.

“Agencies must be required to demonstrate their assessment of whether they have the in-house skills and capabilities, and the benefit of nurturing specific in-demand skills and capabilities, prior to going out to tender for consultants and contractors. Agencies must rein in the amount of work that has been opened to private providers.”

As of October 2020, there were 2,277 employees in the Services Australia technology services branch, equating to 7.3 percent of the workforce. But while ICT contractors were previously used mainly for surge capacity, there is now a “strong prejudice” to go to private contractors as a first option, the CPSU said.

“The agency appears to have lost sight of the benefits of in-house ICT development. There is a lack of career paths for skills ICT professionals and this is hamstrung by an APS-wide bargaining policy that limits enhancing APS conditions to attract the best and brightest to tech APS, along with the staffing cap,” it said.

“Members also advise that skilled APS ICT staff are leaving because they have no career anymore in Services Australia.”

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