Public sector staffing and resourcing

Budget Review 2020–21 Index

Philip Hamilton

Staffing, contractors and consultancies

Developments prior to the COVID-19 pandemic

When discussing public sector employees, the budget papers use the average staffing level (ASL), a method of counting that adjusts for casual and part-time staff in order to show the average number of full-time equivalent employees. ASL is almost always a lower figure than a headcount of actual employees (the Australian Public Service Commission uses the headcount method).

In the 2015–16 Budget, the Government undertook to maintain the size of the general government sector (GGS), excluding military and reserves, at around or below the 2006–07 ASL of 167,596. Agency Resourcing: Budget paper No. 4: 2020–21 indicates that this objective has been achieved over the years prior to the COVID-19 pandemic.

Critics, notably the Opposition and the main public sector union, refer to this policy objective as the ASL cap or the staff cap, and express concern that the APS is ‘being tasked with delivering more government initiatives with fewer people’. In 2018 it was reported that, since the change of Government in 2013, spending on contract labour hire and consultancies doubled to $730.0 million, with commentators suggesting that this increase, along with the ASL cap, deskills public service agencies. However, the Government has argued that ‘the overall cost of government administration continues to fall as a proportion of overall government expenditure’. The management of consultancies is the subject of a Budget measure discussed below.

The Preface to Budget Paper No. 4 provides a useful overview of the Government’s perspective on its approach to government administration, including staffing, since 2013.

Impact of the COVID-19 pandemic

The Preface to Budget Paper No. 4 outlines staffing changes that formed part of the Government’s response to the COVID-19 pandemic, including the redeployment of over 2,000 employees within the public service to ‘support the delivery of critical services’, and the expectation that in 2020–21 ASL will temporarily increase beyond 2006–07 levels. The Preface also notes that ‘ongoing natural attrition, combined with temporary delays to recruitment in late 2019–20, have resulted in ASL across the General Government Sector being below the level expected at the 2019–20 Budget’.

In the context of these developments, the staffing chapter in Budget Paper No. 4 does not provide the usual comparative information about the ASL for each agency, presenting only ASL estimates for
2020–21, and noting: ‘ASL outcomes for 2019–20 are published by agencies in their Portfolio Budget Statements and data will also be published later this month in Annual Reports’.

Management Advisory Services panel for Government

In a performance audit published in December 2017, the Auditor-General found ‘a substantial difference in the value of contracts identified in AusTender using the ‘consultancy’ flag and the total value of contracts for the identified suppliers and categories ... This may suggest entities have underreported consultancy contracts’. These and related issues were examined in Senate Estimates hearings and by an inquiry of the Joint Committee of Public Accounts and Audit (the inquiry lapsed without issuing a report when Parliament was dissolved in April 2019).

With the aim of ‘improv[ing] the quality, consistency and efficiency of services’, the Budget provides $4.5 million over four years for the Department of Finance (Finance) to establish ‘a new Whole of Australian Government Management Advisory Services consultancy panel’.

An August 2020 AusTender notice indicated that there will be three categories of service covered by the panel (financial, corporate, and commercial management) and that it ‘will not include labour hire (contractor) services’. An Australian Financial Review article stated:

Key to the increased transparency will be creating a centralised whole-of-government procurement panel for consultancy services to leverage the government’s combined buying power and ensure best value from external advisers.


The new reporting requirements will begin by July 2021, starting with spending on financial management advisory services.


Smaller firms are concerned that consolidating the process ... will further entrench the dominance of the large firms ...

Government agencies will also have to standardise the way they report on their spending on consultants and contractors in their annual reports.

The Government expects that ‘the cost of this measure will be met by an entity administration fee offset by efficiencies generated through the new arrangement’. This is presumably a description of arrangements subsequent to the Panel’s establishment, for which $4.5 million has been allocated.

Whole-of-government and cross-portfolio resource management measures

Whole-of-government shared enterprise resource planning

The Budget provides $35.6 million in 2020–21 for Finance to further develop the model for a whole-of-government shared enterprise resource planning solution (GovERP), a project already in development. As outlined in a February 2020 AusTender notice, the Government’s Shared Services Program aims to:

... consolidate, standardise and automate the delivery of core transactional corporate services across non-corporate Commonwealth entities ... Finance is working with the Shared Services Provider Hubs to co-design a new GovERP initiative [that] comprises the design, development and trial of a common whole-of-government platform, which will deliver a range of standardised corporate and financial services.

Although the concept of shared services suggests that savings and efficiencies are likely to be available, in an audit that examined the delivery of HR services by hubs, the Auditor-General noted: ‘in the absence of available benchmarking data, it is difficult for entities to determine what efficiencies have been gained from engaging in shared services arrangements’. The Auditor-General noted that Finance had observed ‘a lack of consistent data on the cost and quality of current corporate activities, and variation in costing methodologies’ and that Finance is ‘working with agencies to improve the benchmarking exercise and accuracy of data’.

Other information and communication technology (ICT) related Budget measures have been collated in an article by an ICT trade publication. The Preface to Budget Paper No. 4 discusses the use of ICT in the delivery of services, particularly in the context of the Government’s response to the COVID-19 pandemic.

Monitoring of government spending and use of commercial financing and private sector capital

The Budget provides $29.6 million over four years for Finance to ‘strengthen the capacity of Finance to assess the efficiency and quality of government spending, by implementing better real-time monitoring of expenditure and enhancing the scrutiny of new and existing programs that respond to critical priorities’ and ‘facilitate more widespread use of commercial financing and procurement models to secure private sector capital’.

The first measure is consistent with Outcome 1 of Finance’s Portfolio Budget Statement (PBS), but no details are provided about how the additional funding will improve Finance’s performance of this business-as-usual function. No details are provided about the purpose of the proposed arrangements in the second measure, or how they would operate within (or depart from) the current resource management framework.

Procurement-related measures

The Budget provides ‘$4.6 million over four years (and $1.3 million per year ongoing)’ to develop and implement procurement policies associated with the Payment Times Reporting Bill 2020 (passed on 6 October 2020). As outlined by the Explanatory Memorandum, the Bill ‘establishes a payment times reporting requirement for eligible entities’, including ‘Commonwealth government corporate entities who meet the income threshold’ to ‘provide bi-annual reports on their small business payment terms and practices’ for publication on a central public register.

The Digital Business Plan (part of the broader JobMaker Plan) includes ‘$3.6 million over two years from 2020–21 to facilitate the adoption of e-invoicing across all levels of Government, and to consult on options for mandatory e-invoicing across all levels of Government and by business’.

Parliament-related funding measures

Parliamentary departments: increased funding

The Department of the Senate will be provided with $2.2 million in 2020–21 to ‘support increased Parliamentary committee activity’. The Department of Parliamentary Services will be provided with $117.8 million over four years to ‘support its operations, further improve security, enhance video conferencing capabilities and maintain service levels while COVID-19 health restrictions and precautions impact external revenue’. This includes capital funding of $10.8 million.

Australian National Audit Office (ANAO): decreased funding

In September 2020 the Auditor-General, Grant Hehir, wrote in his Annual report 2019–20 that in that year, ‘42 performance audit reports were tabled against a target of 48’ and:

... Without supplementary appropriations, the number of performance audits tabled in the Parliament will continue to reduce. On this basis, I have written to the Prime Minister to propose that the ANAO’s funding is put on a more sustainable basis ...

The Guardian reported that ‘the ANAO now expects to deliver 40 audits in 2021–22, declining to 38 by 2023–24’. The Guardian also reported that ‘the Coalition-controlled joint committee of public accounts and audit [JCPAA] has written to the prime minister backing the auditor general’s call for more funding to deliver 48 performance audits a year’.

The 2020–21 Portfolio Budget Statements show that resourcing for the ANAO has reduced by $14.0 million from 2019–20 (from $112.0 million in 2019–20 to $98.0 million in 2020–21). However the Treasurer stated that the ANAO’s departmental appropriation has declined by only $600,000 ‘taking into account the unspent money from previous allocations ...’ and that average staffing levels are broadly unchanged. The Guardian has attributed the funding reduction to ‘ongoing deficits [at the ANAO] and the Coalition’s efficiency dividend’.

Responding to a question without notice in Parliament the day after the Budget, Prime Minister Morrison stated that ‘when the government receives the outcomes of [the current] 10-year review, we will consider the resourcing for the ANAO’. By convention, in every third Parliament the JCPAA reviews the Auditor-General Act 1997 in accordance with section 8 of the Public Accounts and Audit Act 1951. The last review was tabled ten years ago (December 2010). The scope of the current review, announced in late September 2020, includes ‘resourcing arrangements’.

Efficiency Dividend

Since 1987–88 the Australian Government has applied an Efficiency Dividend (ED) to ‘departmental’ (that is operating) expenses of Australian Government agencies, reducing funding to account for increased public sector productivity over time. The ED reduces the base departmental funding of agencies by the ED rate prior to the addition of any new measures. The ED rate is not always explicitly stated in the Budget because, rather than being a Budget measure, the ED is a factor determined and applied by Government in the course of developing the Budget. The ED is not discussed in the 2020–21 Budget papers, and was not covered in the July 2020 Economic and Fiscal Update.

The ED rate has varied to some degree over the years, but has been most frequently applied at a rate of either 1.00 or 1.25 per cent. Over time various agencies have been fully or partially exempted from the base and/or one-off rates.

The most recent coverage of the ED was in the Mid-Year Economic and Fiscal Outlook 2019–20 (MYEFO) of December 2019, which noted: ‘the Government will achieve savings of $1.5 billion over four years by maintaining the Efficiency Dividend (ED) at the 2018–19 level of 2.0 per cent for two additional years (2019–20 and 2020–21), stepping down to 1.5 per cent in 2021–22 and returning to the base rate of 1.0 per cent from 1 July 2022’. The MYEFO also noted ED exemptions for several specific agencies, national collecting institutions, and agencies with an ASL of less than 200.


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