Executive Summary

The shift from committed and capable Australian Public Service (APS) staff to labour hire, consultancies and information and communications technology (ICT) firms has generated profits for multinational corporations, but undermined APS capability, wasted expenditure on poor value for money ventures and weakened public service delivery for Australians.
The APS is a foundational institution of Australia's democracy and its proper functioning is essential to the prosperity and security of all Australians.
Evidence to this inquiry, however, has reiterated the now well-established position that the APS is suffering from a lack of investment in its people, its policy development, and its digital and ICT capabilities. This is resulting in direct and adverse impacts on the APS’s ability to deliver for the community.
These findings are not new, having been made repeatedly in recent years by numerous reviews which have found APS capability is no longer fit for purpose—and yet these findings remain unaddressed.
In late 2019, the Independent Review of the APS (Thodey Review) found that the APS needed 'a service-wide transformation', encompassing both short-term change and long-term reform, in order to achieve better outcomes and more efficiently serve the Government, the Parliament and the Australian public.
The committee agrees with the observation made in the Thodey Review that although the APS is not broken, it is not performing at its best. The COVID-19 pandemic has shown this to be a prescient observation, and one which has not been properly heeded by the Government.
In saying this, the committee would like to make clear that it is not diminishing the tremendous amount of work done by APS staff and leadership. The committee acknowledges the extraordinary commitment and resilience shown by APS employees over the past 24 months in dealing with the unprecedented crises created by bushfires, floods and the ongoing COVID-19 pandemic.
However, what became abundantly clear to the committee during this inquiry is that it is not sufficient or sustainable to rely on the efforts of APS employees while APS capability is being run down and undermined. Additionally, the committee heard that Australians want more effective and more active government stewardship of services, as well as deeper engagement in local communities.

Privatisation and externalisation

The committee has concluded that there is a pressing need for the APS to pivot away from the damaging trend of outsourcing core, ongoing public service work. The hollowing out of APS capability through privatisation and externalisation must stop. Evidence received indicated that the Average Staffing Level (ASL) cap has led to a systemic overreliance on labour hire and contracting arrangements within the APS. This widespread and unnecessary externalisation is eroding workforce capability and leading to poor service delivery outcomes.
Under the ASL policy the Government is actively choosing to direct large amounts of public money away from essential services and towards for-profit companies. The committee considers it is not ethical or in the public interest to direct billions of dollars of Commonwealth expenditure to for-profit firms, which undermines APS capability and results in the delivery of an often inferior service that could be delivered more cost-effectively by permanent APS staff.
While the ASL cap may make the APS appear smaller, it does so at the expense of long-term capability and quality service delivery for Australian communities. The shadow workforce necessitated by an arbitrary, ideologically driven staffing cap is not sustainable, cost-effective or transparent.
The committee is also concerned by the overreliance on external consultants for policy advice. The role of the public service in providing 'frank and fearless advice' to government is one of the key characteristics of a properly functioning Westminster democracy. When the Government, despite access to a skilled and independent APS, consistently chooses to spend exorbitant amounts of taxpayer money on commissioning strategic policy advice from private consulting firms, public sector capability is undermined.
It is alarming that the Government's preference is for policy advice from private, for-profit firms, which operate with an ethos vastly different to that characterised by the values of service, integrity and impartiality which define the APS. The committee considers that this preference shows a flagrant disregard for the value of public policy, as well as the skills and capacity of the APS.
The committee believes that the APS must end its overreliance on external workforce and consulting arrangements and find other ways to be flexible within the funding envelope set out in the Budget, while building core skills, knowledge, and APS capability.

'Frank and fearless' undermined

The committee has been persuaded by the evidence before the inquiry that the APS is suffering from a creeping politicisation. This is cause for serious concern, and the committee calls upon the APS to do more to fiercely protect its independence. The role of the APS as set out in the Public Service Act 1999 is abundantly clear. The APS is established to be an apolitical public service that is efficient and effective in serving not only the government of the day, but also the Parliament and the Australian public. The latter two of these stakeholders hold equal importance with the first and must be respected as such.


The importance of a robust and capable APS in the face of future challenges has been clearly demonstrated by Australia's experience of the COVID-19 pandemic.
Evidence before the committee indicates that the APS must be sufficiently funded and resourced to allow it to excel at essential service delivery for the Australian community and to perform its other vital national interest functions. The APS should focus on rebuilding and investing in in-house skills, systems and people to restore its capability and reach its full potential.
The committee is of the view that action and investment is urgently needed to halt APS capability erosion and to ensure that the long-term capacities and skills of the APS are properly developed, retained and safeguarded well into the future.
Based on the evidence to the inquiry, the committee has set out 36 recommendations which relate to:
the labour hire arrangements in the APS;
the digital and ICT capability of the APS;
the use of consultants for public policy advice;
the procurement capability of the APS;
the strategic management of the APS workforce; and
the culture of the APS.

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