• Mar 11, 2025 modified: Mar, 11 2025

Public Service Cuts

Public Service vs. Big Consulting: Higher Costs, Weaker Services

For years, the debate over the size and role of Australia's public service has been a point of political contention. At its core, this debate revolves around two competing ideologies: Labor's preference for a well-funded public sector workforce and the Coalition's push for a leaner government, often outsourcing services to private consulting firms.

The Coalition argues that reducing the public service saves taxpayer money and improves efficiency. However, real-world evidence suggests that outsourcing often leads to higher costs, weaker transparency, and declining service quality.

Suppose Australia wants a government that prioritizes efficiency, accountability, and value for taxpayer money. In that case, we must question whether cutting public service jobs in favor of private consultants is truly the right path forward.

The Case for a Strong Public Service

The Australian public service is the backbone of essential government operations, providing critical services that millions of people rely on every day. From processing Medicare claims and pension payments to managing disaster relief and border security, public servants ensure that the government functions efficiently and effectively.

The impact of these changes has been measurable and significant:

• Veterans' Claims Backlog Cleared – The previous government's reliance on a shrinking public service left 42,000 veterans waiting years for claims to be processed. By hiring more staff, Labor reduced the backlog by 97%, ensuring veterans received timely support.
• Faster Service Delivery – Wait times for critical services have improved dramatically. Parental leave claims that once took 31 days now take just 3, and youth allowance applications have been cut from 28 days to 9.
• Stronger Oversight and Reduced Costs – By investing in permanent, in-house expertise, the government avoids paying premium fees to private consulting firms for tasks that could be handled internally at a lower cost.

A robust public service is not about creating unnecessary jobs - it's about ensuring that government programs are delivered efficiently, fairly, and with long-term sustainability. When governments invest in their workforce, Australians benefit from faster, more reliable services.

The Coalition's Push for Cuts and Outsourcing

The Coalition has long advocated for smaller government and outsourcing as a way to cut costs. In their latest proposal, they plan to eliminate 36,000 public service jobs—roughly 20% of the workforce.

However, the reality of these cuts is far more complex than simple cost savings. While reducing the public workforce might lower government payroll expenses, it does not eliminate the demand for those services—it just shifts the work to private consultants, often at a much higher cost.

Under the previous Coalition government (2013–2022):

• Government department spending rose by 35%, yet the number of public servants fell by 4%.
• Departments were forced to rely on a "shadow workforce" of 54,000 external contractors.
• Long wait times and declining service quality became widespread, as essential functions were outsourced to private firms that prioritized profits over public interest.

The most glaring example of this failed outsourcing model was the PwC scandal, in which consultants used confidential government tax plans to benefit private clients. This incident exposed serious accountability and transparency concerns when public services are placed in private hands.

The Real Cost of Outsourcing Public Services

The Coalition's push for outsourcing public services to private consultants is often framed as a cost-saving measure, but the reality is far more expensive and less transparent.

1 Higher Cost for Taxpayers

According to the Australian National Audit Office (ANAO, 2022), the cost of hiring consultants is often significantly higher than employing in-house public servants. A 2021 Senate inquiry revealed that government departments paid four to five times more for consultants than they would have spent on internal staff performing the same work (Senate Finance and Public Administration References Committee, 2021).

To cite samples:

• Between 2013 and 2022, public sector employment decreased, yet government spending on consulting firms soared to over $1 billion per year (Australian Public Service Commission, 2023).
• The Department of Home Affairs spent $3.1 billion on external contractors and consultants from 2018 to 2022 - a move that auditors found had no clear cost benefit compared to using internal staff (ANAO, 2022).
• The PwC tax leak scandal exposed how consultants working on government contracts used insider information to help private clients avoid taxes, raising serious concerns about conflicts of interest (Australian Senate, 2023).

2 Declining Service Quality

When core government services are outsourced, efficiency often suffers. Private firms prioritize profit over public service, and their contracts are often short-term and transactional, leading to:

• Weaker institutional knowledge – Unlike career public servants, consultants work on temporary contracts and lack long-term expertise in government functions (ANAO, 2022).
• Service delays – A 2020 report found that reliance on private contractors in Services Australia contributed to longer wait times for Centrelink and Medicare claims (Australian Public Service Commission, 2023).
• Reduced oversight – Unlike public servants, consultants are not subject to the same level of parliamentary scrutiny, making accountability more difficult (Senate Finance and Public Administration References Committee, 2021).

3 Transparency and Ethical Concerns

One of the biggest risks of outsourcing is the lack of transparency and accountability. Unlike government employees, consulting firms are not required to disclose their internal processes, decision-making, or potential conflicts of interest. This can lead to serious ethical concerns, as demonstrated by:

• The PwC tax scandal, in which government consultants misused confidential Treasury tax reform plans for private clients (Australian Senate, 2023).
• Robodebt, an automated debt collection scheme implemented under the Coalition that relied on flawed data-matching and resulted in wrongful debt recovery, leading to financial hardship and even suicides. The Royal Commission found that public service cuts and outsourcing weakened oversight, allowing the unlawful scheme to proceed (Royal Commission into the Robodebt Scheme, 2023).

A Need for Balance

The evidence is clear: while outsourcing may provide short-term flexibility, long-term over-reliance on private consultants results in higher costs, reduced service efficiency, and serious accountability concerns. Instead of cutting public service jobs in favor of expensive private firms, Australia must strike a balance - ensuring that the government retains the internal expertise needed to manage essential services effectively while using external specialists only when necessary.

A strong public service is not just about maintaining jobs; it's about ensuring government services remain accessible, affordable, and accountable to the Australian people.

References

Australian National Audit Office. (2022). Management of Government Contracts with Consultants. ANAO.

Australian Public Service Commission. (2023). State of the Service Report 2022–23. APSC.

Australian Senate. (2023). Inquiry into PwC and Government Contracting. Commonwealth of Australia.

Royal Commission into the Robodebt Scheme. (2023). Final Report: Lessons from the Robodebt Disaster. Australian Government.

Senate Finance and Public Administration References Committee. (2021). Government Procurement and Outsourcing: Impact on Public Sector Capacity. Commonwealth of Australia.