In-house effort drops contractors
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Defence faces the most substantial cuts in the APS’s contractor reduction plan.
Reports say the Albanese government’s decision to bring $527 million worth of work back in-house primarily targets Defence, which will see $308 million in contractor cuts.
This department will bear the largest share of contractor reductions, with significant cuts also expected in Social Services and Treasury at $79.3 million and $33.5 million, respectively.
Together, these three departments make up more than 80 per cent of the total contractor reduction.
The government aims to restore key functions within the APS, focusing on work typically handled in-house, such as policy development, drafting legislation, and providing strategic advice.
Finance Minister Katy Gallagher says the insourcing effort aims to “strengthen capability, to ensure the APS can deliver the services Australians expect”.
However, the shift to insourcing is not just a cost-saving measure.
The Department of Finance has explained that “reductions in supplier expenditure will be offset by related employee costs as work is brought in-house”.
With Defence accounting for 1,052 of the 1,654 contractor positions identified for phase-out across the APS, it is set to be the largest contributor.
In official documents, its contractor workforce is categorised as a single block, including labour hire and consultancy, without a specific breakdown.
ICT roles also pose challenges, as “around two-thirds of agencies consider some of the work in the ICT & Digital Solutions job family to be core”, the Department of Finance says. However, many agencies find transitioning these specialised roles in-house difficult due to high adaptability requirements.
These cuts aim to restore the APS’s in-house functions, moving away from the previous Coalition government’s practice of using contractors in “executive teams” roles, which Finance Minister Gallagher says “blurred the lines” between public and private roles.
