Andrew Leigh

The False Economy of Public Service Sackings

The Canberra Times, 14 January 2018

Would you burn a dollar of petrol driving to the other side of the city so you could save fifty 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 federal 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 being 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 that there would be 12,000 public service cuts, all by natural attrition. Then the heads began to roll, beginning with several agency heads being sacked. Five years on, and 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 new 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 around $250 million in 2012-13 to over $500 million in 2016-17. 

Appropriately, the Joint Committee of Public Accounts and Audit, run by Senator Dean Smith and Julian Hill MP, holding an inquiry into these troubling findings(submissions close 16 February).

No-one doubts that 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 might make sense to draw on people and organisations that have dedicated 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 at consultant’s rates. Such an approach costs the taxpayer more, and leaves departments denuded 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 ten major reforms over the past generation that have 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 the higher education sector. All were underpinned by the public service.

If people tell you that we have too many public servants, a simple riposte is to suggest they look across the advanced world. Eighteen percent of Australian workers are employed by the public sector, well below the OECD average of 21 percent. 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 Australian public service. But it needn’t be that way. Past Liberals, 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 that race to ensure that those affected by floods and fires get 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. His website is www.andrewleigh.com. This opinion piece was first published in The Canberra Times on Sunday, 14 January 2018.