Labor to achieve an additional $1 billion in savings from consultants and contractors

Minister for Finance, Minister for Women, Minister for the Public Service

The Albanese Labor Government will deliver a further $1 billion in savings from reducing spending on consultants, contractors, and labour hire in the 2024-25 Budget. This is part of the Government’s commitment to reduce the reliance on external labour and rebuild a fit-for-purpose public service that is resourced to deliver the services Australians expect.

This save is in addition to the $3 billion in savings from reducing spending on external labour that the Government delivered in the 2022-23 October Budget, bringing the total savings delivered to $4 billion.

The Government will also undertake a second Audit of Employment to measure and track exactly how the public service is delivering on the Government’s commitment to reduce its reliance on external labour.

Since the election, there are around 8,700 roles that were done by contractors or labour hire that are now being performed by public servants. This includes an additional 2,400 conversions to be reported in the 2024-25 Budget.

The use of the biggest consulting firms has significantly reduced under the Albanese Government, dropping by $624 million year-to-date this financial year compared to the comparable period in 2021-2022. Public servants are now doing this work that was previously outsourced.

Minister for Finance and the Public Service, Senator the Hon Katy Gallagher, said that instead of relying on a more expensive outsourced shadow workforce, the Albanese Labor Government is rebuilding the public service to do the job the Australian people expect.

“While the Liberals talked tough about capping public service numbers when they were in government, in reality they were spending billions outsourcing the work to keep the public service headcount artificially low,” Minister Gallagher said.

“The important investments that we’ve made in Services Australia, Veterans’ Affairs, the NDIA, Home Affairs and AUKUS are to ensure that the public service has enough staff to do the job they need to do to deliver services across the country and to keep Australians safe.”

“Two years into the public service rebuild, it’s no surprise that the Liberals are already drawing up plans to cut at least 10,000 public servant jobs and reduce services. It is clear Peter Dutton wants to go back to the era of Robodebt and slash the services that Australians rely on.”

The $4 billion external labour save will comprise $625 million allocated across all government agencies in 2027-28, consistent with the approach taken in the October Budget, plus an additional external labour levy of $375 million over four years from 2024-25.

The first Audit of Employment showed that the former Government spent approximately one in every $4 on external labour in 2021-22. At the same time as reducing the services Australians rely on, the Liberals employed a shadow workforce of tens of thousands of private consultants and contractors to keep the size of public service artificially low.

The actions the Albanese Labor Government is making to rebuild the public service and reduce the reliance on consultants and contractors recognises that delivering outcomes for Australians must be built on the foundations of a strong public service.

/Public Release. View in full here.