Casual employment arrangements
As highlighted in Chapter 11, the number of non-ongoing employees in the Australian Public Service (APS) is currently at the highest level it has been over the last two decades. As at 30 June 2020, there were 18 373 non-ongoing employees, representing 12.2 per cent of the APS workforce, with the majority of these employees (57.8 per cent or 10 618 people) being employed casually. As a result, the casual workforce currently forms 7.1 per cent of the broader APS workforce, and represents an increase of over 6 per cent since 2001.
As noted in the 2019–20 State of the Service Report, the majority of this increase occurred between 1 January 2020 and 30 June 2020 as a result of the Australian Government's response to the Black Summer bushfires and the commencement of the COVID-19 pandemic. The Australian Taxation Office (ATO) case study below, however, highlights that some casual employees have been engaged under these arrangements for substantial periods of time prior to these emergencies.
The Community and Public Sector Union (CPSU) submitted that casual workers experience a number of negative outcomes due to their employment arrangements, including:
inferior rights and entitlements;
irregular and unpredictable working hours;
no entitlement to various forms of leave, such as annual, personal, carers, and compassionate leave; and
uncertainty around the right to request flexible working arrangements and unpaid parental leave.
Given the above, the CPSU noted that casual employees commonly experience difficulty in obtaining home loans and face challenges in planning for significant future purchases. These issues may disproportionately impact women in the APS, as 64.1 per cent of non‑ongoing roles are occupied by this cohort.
Box 12.1: Case study: Casual employment at the Australian Taxation Office
The ATO is the Australian Government’s principal revenue collection agency, and engages a significant number of ongoing, non-ongoing, and casual staff to deliver services for the Australian community. As at 30 June 2020, the ATO had 21 184 employees mostly located across Australia in 22 buildings and 10 shopfront sites. The CPSU submitted that 2 307 members of the ATO's workforce are currently engaged under casual arrangements.
In its 2019–20 annual report, the ATO noted that 'casual employees are engaged to perform duties that are irregular or intermittent'. The CPSU, however, contended that the majority of these employees perform work that is 'ongoing and central to the ATO's functions', and, hence, is not intermittent or irregular work, and that many of these individuals have been engaged on a 'very long-term basis'.
The CPSU stated that a survey of ATO casual employees it undertook in 2019 showed that 62 per cent of respondents working in the regional city of Albury had worked at the ATO for more than two years, while one quarter had worked for nine years or longer. The CPSU argued that, although the work these casual employees undertake is ongoing, stable, and often unchanging, they 'have no pathway to secure, permanent employment'.
Responding to questions regarding the ATO's utilisation of these long‑term casual arrangements, the Deputy Commissioner of People at the ATO, Mr Bradley Chapman, stated that:
We certainly do have some casuals who are quite happy with the casual working arrangement because it fits in with their lifestyle, so they may be long-term casual employees.
Notwithstanding the above, Mr Chapman noted that the ATO runs regular recruitment which provides opportunities for casual employees, and others, to apply for ongoing roles. Although acknowledging that not everyone who applies is successful in securing an ongoing role, he submitted that:
… in the last year, we've certainly seen, across nearly all of our sites, the number of ongoing employees has increased, and the number of casual employees has decreased. So we are seeing a shift to more ongoing employees than casual employees.
In its submission to the inquiry, the CPSU argued that there is a high concentration of casual workers in a number of key ATO sites across Australia. Specifically, it stated that:
45 per cent, or 247 workers, of the Wollongong workforce are casual;
38 per cent, or 385 workers, of the Albury workforce are casual; and
25 per cent, or 197 workers, of the Penrith workforce are casual.
In answering questions regarding the high proportion of casual employees at the ATO's Albury site, Mr Chapman said that it was not indicative of the broader workforce and argued that it was 'higher both due to tax time and because we have a particular function that is very seasonal in Albury with our scan and capture work'.
The CPSU also noted that many casual employees are commonly engaged at the APS 1 and APS 2 classifications, and raised their concern that these individuals 'are paid the lowest rates of pay in the agency, with no annual leave and no paid sick and carer's leave'.
Labour hire and contracting arrangements
The utilisation of labour contractors and consultants by the Government has increased markedly in recent years. The CPSU estimates that there are as many as 20 000 labour hire workers across the APS, and that as many as one in five people are engaged either via these arrangements or as contractors.
As highlighted in Chapter 11, across a sample of 24 agencies, spending on contractors has more than doubled over the period between 2012–13 and
2016–17. Furthermore, information sourced from AusTender indicated that the total value of consultant contracts across the APS increased from $386 million to $545 million during the same four year period.
External workers and the performance of core public service functions
It was argued during the inquiry that labour hire and consultants are being utilised to undertake core public sector work. For example, the National Secretary of the CPSU, Ms Melissa Donnelly, cited a survey the CPSU had recently undertaken of its membership. She submitted that almost 90 per cent of respondents said that labour hire was being used for the normal ongoing work of the agency. She highlighted that this included compliance work at Services Australia and claims processing at the Department of Veterans' Affairs—not seasonal work, but core APS work from the CPSU's point of view.
Responding to questions regarding this concern, the General Manager for People at Services Australia, Mr Michael Nelson, stated the following:
What we [Services Australia] try to do is to focus on having ongoing APS employees undertaking ongoing work. The primary purpose of labour hire and other forms of employment is to be more demand focused … for projects, for increasing customer requirements and that sort of thing. The nature of labour hire work should be more short-term. Sometimes that does drag on for a period of time, but it's generally because the demand that we're seeing or experiencing has been longer than we expected when we initially made the determination to engage them for that work.
Notwithstanding the above, Ms Donnelly contended that the increased expenditure on external workers, as highlighted by the CPSU's internal analysis and the 2019 Independent Review of the Australian Public Service, showed that the labour hire workforce is undertaking 'core APS functions', and not just being utilised for seasonal fluctuations.
During his evidence to the committee, the Acting Managing Director of ManpowerGroup, Mr David Bruch, was questioned about the types of roles he provides workers for, and whether these roles were ongoing or temporary in nature. He told the committee that:
Overall, the majority of the roles we are providing to the federal government are specialist roles … On average, monthly attrition in our on‑hire workforce is between 10 and 20 per cent. That would imply that most of our on-hire workers turn over within a year.
The Managing Director of Hays Specialist Recruitment (Hays), Mr Nick Deligiannis, provided a breakdown of the tenure of the approximately 2900 temporary workers that Hays had deployed to the APS during September 2021. This is shown in Table 12.1 below.
Table 12.1: Hays' temporary worker tenure with the APS
Less than six months
54 per cent
Six to twelve months
17 per cent
17 per cent
8.0 per cent
2.4 per cent
< 1 per cent
Five years and over
< 1 per cent
Source: Mr Nick Deligiannis, Managing Director, Hays, answers to questions on notice, 27 August 2021 (received 17 September 2021).
The availability of whole-of-government data
During the inquiry, it became clear that there was no person or entity tasked with collecting whole-of-government data regarding the utilisation of external workers, such as those engaged through labour hire arrangements.
The Acting Deputy Australian Public Service Commissioner, Mr Patrick Hetherington, noted that the Australian Public Service Commission's (APSC) remit only covers people employed under the Public Service Act 1999 and in public service agencies through its survey work. Given this, he stated that 'we [the APSC] don't actually capture data on the number of labour hire employees in the Public Service'.
Mr Hetherington also conveyed that, from the APSC's perspective, the workforce mix within agencies, including the percentage of labour hire they utilise, is the responsibility of the head of the respective agency. He submitted that these individuals are 'best placed to determine what the appropriate mix of their workforce should be based on their business outcomes'.
Upon being asked whether anyone in the Government knew the proportion of the public service workforce engaged through labour hire, the Deputy Secretary of Budget and Financial Reporting within the Department of Finance, Mr Matt Yannopoulos, stated:
It is true that there's no central data holding of labour hire information. There is reporting through the AusTender platform of labour hire contracts, but there is no … aggregated set of data that we possess in [the Department of] Finance—or anywhere else in government, to my knowledge.
The average staffing level cap
Evidence provided to the committee during the inquiry indicated that the Government's average staffing level (ASL) cap has increased the use of labour hire arrangements across the public service.
The CPSU was highly critical of the Government's decision to implement an ASL cap, noting that it is regularly informed by managers across a number of Government agencies that the ASL cap is the reason that labour hire workers have been engaged. In its submission to the inquiry, it stated the following:
The policy makes government appear smaller, but at the expense of everything that makes government valuable to communities. Agencies are still required to deliver what the government wants and the community needs.
It's not a limit on how much work is done, or how much money is spent, or even how many people can do work on behalf of the government—it's only a limit on secure employment.
Although highlighting that there are other drivers and reasons for the growth in labour hire arrangements across the public service, Mr Yannopoulos acknowledged that the ASL cap has also been a contributing factor. Specifically, when asked whether the ASL cap would contribute to the growth in labour hire arrangements to meet the increasing demand for Government services, he stated:
I think that's possibly a fair characterisation. Agencies have needed to manage within a government set ASL cap. If they are needing to get extra workers, then they will use labour hire or direct contracting to support that. But I don't think it's the only reason.
Mr Nelson was asked whether he believed the ASL cap was a driving force behind Service Australia's use of a blended workforce. In his response, he said:
That's a difficult question to answer in the current environment, simply because the level of demand is something that no-one expected. It does increase and decrease at times, but, over the last little while, the peaks have been really high in terms of the level of demand that we've experienced, therefore we've had to scale up quite significantly to meet that. We also appreciate that the ASL cap or guidance, if you like, is not something to be under throughout the entire year. There is the ability to be over the cap at points throughout the year, as long as it averages out over the course of the year as close as possible to being at that cap amount.
The Australian Maritime Safety Authority (AMSA) was questioned about its approach to meeting service requirements once the ASL cap is reached. The Deputy Chief Executive Officer, Ms Sachi Wimmer, said the following:
… it will depend on the situation and what capability we need. If we need specific capabilities, we may go to the market if we're unable to source them. Some of the capabilities, particularly in the Canberra market, are very short at the moment—for instance, data, cybersecurity and those kinds of skills. Otherwise, we will see what we can do about balancing the staff arrangements across our teams. But, as with every agency, it's a balancing act.
Ms Wimmer acknowledged that the ASL cap 'adds a level of challenge to staffing'; however, she also noted that '[w]e remain productive and are delivering what we need to'.
Box 12.2: Case study: The utilisation of labour hire at the Australian Maritime Safety Authority
The Australian Maritime Safety Authority (AMSA) is the government agency responsible for search and rescue; responding to maritime pollution; the safety and regulation of large ships visiting Australia; and, since 1 July 2018, the safety regulation of domestic commercial vessels.
AMSA consists of approximately 440 employees and, unlike most other public service entities which employ under the Public Service Act 1999, AMSA employees are employed directly under its enabling legislation; that is, the Australian Maritime Safety Authority Act 1990.
Following a nine year process initiated by the Council of Australian Governments to establish AMSA as the single national regulator for Australia, on 1 July 2018 AMSA took on the responsibility for the safety and regulation of domestic commercial vessels. This involved AMSA becoming responsible for approximately 31 000 vessels and the issuance of qualifications to over 65 000 seafarers.
In preparation for the national system, AMSA established a contact centre in 2015, known as AMSA Connect. Its purpose was to provide service delivery during AMSA's transition phase to becoming the national regulator. The Deputy Chief Executive Officer of AMSA, Ms Sachi Wimmer, stated that:
The Connect staffing model comprises a small core of permanent staff supplemented with casual employees or contractors. It was intended to provide AMSA with flexibility. This was because we did not know the likely operational impact of full service delivery. The staffing model allows AMSA to expand or contract Connect as we continue to embed the national system and as industry service needs settle.
In evidence provided to the committee during the inquiry, AMSA stated that the 'regulatory and funding models for the national system are yet to be settled'. AMSA also noted that, although the Australian Government has committed to undertake a review of costs and charges this year, as well as an independent review of the legislation which established the national system and came in to force in July 2013, no specific information on their timings have been provided.
Issues raised with AMSA Connect
AMSA Connect is the customer service call centre within AMSA which provides advisory and administrative functions across four teams. A member of one of these teams described these services as follows:
We [AMSA Connect] have a beacons line, that takes registration for emergency distress beacons, which are life-saving devices. We have an international qualifications line to support qualifications and seafarers who work on foreign- and Australian-flagged vessels. We have a domestic commercial vessels line … which assists seafarers with domestic commercial qualifications, as well as commercial businesses on vessels. Then we have a reception or triage line, which assists, basically, the entire organisation by dealing with almost any call that comes into the organisation, varying from cold-callers to people calling in with emergency situations or suchlike incredibly serious issues.
Evidence provided to the committee indicated that the call centre usually consists of approximately 35 to 40 customer service officers; however, due to attrition the number is currently below that range. The CPSU submitted that, from the middle of 2018 until March 2021, up to 90 per cent of these officers were engaged through labour hire arrangements with Hudson; however, in April 2021, ManpowerGroup obtained the labour hire contract and the existing customer service officers were transferred across.
The Acting Managing Director of ManpowerGroup, Mr David Bruch, stated that the contract was for a 12 month term, with an option for extension by AMSA, and his understanding was that it was to provide a transitional workforce until a future operating model was determined and implemented. He also noted that, although he was unaware of any plans to increase the workforce, his firm was actively recruiting to address the attrition of staff.
Mr Nicholas Thackray, a labour hire employee of ManpowerGroup and a team member of AMSA Connect, provided a first-hand account of his work at the call centre and the importance of the services he, and his colleagues, provide. He contended that, although he had been doing the same role for three years and that it involved 'consistent regular work', he still remained a labour hire contractor.
Mr Thackray also highlighted the specialised nature of the role, stating that it required an 'incredible amount of training', and submitted that every person he worked with would have an anecdote about an extremely serious matter—sometimes with life and death implications—that they have had to deal with while working at AMSA Connect. Notwithstanding this, he noted that, due to staffing turnover and attrition, he, and his labour hire colleagues, were usually engaged to train other new labour hire staff.
When reflecting upon the pay and conditions of his employment, and the general security of labour hire arrangements, Mr Thackray stated the following to the committee:
Obviously there's the difference in pay, but then we don't get sick leave, we don't get miscellaneous leave, we don't get carers leave and we don't get things like domestic violence leave. Or if somebody close to you dies, there's no leave like that. So essentially every day, depending on what's happening in your life, you make the choice, 'Am I going to get paid today?'—compared with what else is happening in your life.
We care about this job, we think it really matters, but at the end of the day you have to make a decision about what puts food on the table and what gives you that security and peace of mind.
In its supplementary submission to the inquiry, the CPSU raised a number of issues it saw with the existing workplace arrangements at AMSA Connect. It noted that it had received numerous reports from staff of high turnover due to significant workloads; a lack of employment conditions and career progression; and general job insecurity.
The CPSU argued that utilising a labour hire workforce at AMSA has a number of negative impacts for the community and, hence, is not in the best interests of the Australian public. For example, it stated that constant training of new staff reduces the capacity of teams to take calls and provide critical information in a timely manner. Further, it argued that it can create knowledge gaps within the organisation as people who have been trained and have gained significant experience and knowledge leave due to a lack of internal progression opportunities. In conclusion, the CPSU submitted that:
Providing permanent positions through AMSA within the contact centre will ensure these skills are not lost, as well as enhance the institutional knowledge, and overall capacity within these work areas.
Ms Wimmer stated that further definition of AMSA Connect's staffing model would depend on 'key government decisions that are yet to be resolved'. Notwithstanding this, and acknowledging that the transition time had been longer than anticipated, she stated that AMSA had offered longer contracts and increased the proportion of permanent staff within its call centre. On these points she said:
For those engaged with contractors, we've offered 12-month contracts to give greater employment certainty. We've also made a substantial shift towards confirming permanent positions in the last 12 months, and this process is not yet complete.
Ms Wimmer's colleague, Ms Cherie Enders, the Chief Operating Officer of AMSA, noted that the organisation is currently in the process of confirming additional permanent roles and, once finalised, would result in nearly 60 per cent of the AMSA Connect team being permanent staff.
Potential impacts of the increased utilisation of external workers
Reduced capability of the core APS workforce
It was argued during the inquiry that the increased utilisation of external workers, such as labour hire, reduced the capability of the core APS workforce. For example, the CPSU submitted that the loss of experience, the increased short‑term nature of employment, and restrictive industrial arrangements have, amongst other things, caused 'enormous problems' for the capability of the APS.
Further articulating these issues, the CPSU stated that the approach taken by the Government has:
caused the outsourcing of knowledge and policy;
compromised service delivery;
eliminated good jobs and harmed the communities who are reliant on them; and
abandoned the role as custodian of a career public service, and the institutions and norms which Australian democracy relies upon.
This issue was also raised by participants during the Independent Review of the Australian Public Service (the Independent Review). In its final report, it noted the following:
Despite the lack of data, members, observers and partners of the APS expressed credible concerns to the review that APS capability has declined. The decline has been observed across key areas of responsibility—policy advice, regulatory oversight, and delivery of services and support to the public, as well as internal enabling functions.
One of four key reasons the Independent Review identified as causing the decline of capability across the APS was the increased usage of labour contractors and consultants to perform work that was previously 'core in‑house capability'. It further noted the disparity between the significant increase in spending on contractors and consultants and the steady level of spending on APS employees.
The Independent Review acknowledged that not all expertise can be maintained in-house, and noted that there are benefits to leveraging external capability. Notwithstanding this, however, it contended that the use of external capabilities needs to be strategic and well-informed, and that the APS should, at all times, be focused on achieving value for money. On these points, it specifically said the following in its final report:
There is clearly benefit in the APS leveraging the best external capability. It is not possible to have expertise in everything in-house and external providers can be the most efficient way of delivering the best advice, services or support. But the use of external capability needs to be strategic and well-informed, meaning that the APS:
makes decisions on the use of external capability by reference to a whole-of-service workforce strategy that identifies the core capabilities the APS should invest in building in-house—with external capability used to perform non-core or variable work activity
manages use of external capability closely, from the contract design stage through to performance of the prescribed tasks, and
ensures that all arrangements lead to a transfer of knowledge to the APS.
At all stages the APS should be focused on achieving value for money and better outcomes. The APS needs to find the right balance between retaining and developing core in-house capability and leveraging external capability to ensure a sustainable and efficient operating model for the decades ahead.
Unnecessary higher expenditure of public monies
It was contended during the inquiry that engaging workers through labour hire arrangements cost more than direct APS employment and can result in the unnecessary expenditure of public monies.
For example, the CPSU argued that evidence provided by individual agencies indicated that labour hire workers cost at least 20 per cent more than directly engaged staff, and can reach as high as 40 per cent in some cases. In its submission, it concluded:
While the failure across the APS to track and analyse the real cost of these working arrangements, all indications are that they cost the Commonwealth more than directly employing staff, resulting in fewer staff employed and the people working under these arrangements having lower pay, lesser conditions, and less job security. A genuine “lose-lose” situation.
When questioned by the committee as to whether the Department of Finance keeps figures on the wage differential between public service employees and labour hire workers for the same job, Mr Yannopoulos replied; 'No, we do not'.
The Acting Deputy Secretary of the Commercial and Government Services Division within the Department of Finance, Ms Stacie Hall, said:
My understanding is that the way these arrangements work is that the pay rates applicable to engaging someone through a labour hire arrangement are the same as through an ongoing employment arrangement and then there's the application of on-costs and the service provider margin in addition to the direct salary.
In their evidence to the inquiry, representatives from ManpowerGroup and Hays Specialist Recruitment, two labour hire firms with employees placed with the APS, provided an insight into how they set their rates. The Acting Managing Director of ManpowerGroup, Mr David Bruch, stated:
We … seek to recover the base rate of pay, superannuation, payroll tax, workers compensation and some other specific insurance costs. Then our margin would be on top of that, and then GST is applied.
The Managing Director of Hays, Mr Nick Deligiannis, told the committee:
We comply with all regulations and laws, including payment levels, as per the award, if that's applicable. Using the APS rates and base levels, we then apply casual loading onto that for temporary employees. On top of that, there are all the on-costs that we cover as part of the total charge, and then there's our margin. That's how we arrive at the charge rate.
When questioned about the margin, or mark-up, Mr Bruch noted that a 25 per cent mark-up would be 'towards the lower end'. He submitted that superannuation, workers compensation, and work cover costs would add up to approximately 20 percent, resulting in a 5 per cent margin, which he contended was 'not a significant component to then administer [the] business with'.
AMSA confirmed that the mark up rate charged by Hudson Group was 35 per cent during its contract to provide labour for AMSA Connect. After removing the 20 per cent which goes to costs—a rate suggested by ManpowerGroup and which has not been independently verified, and may be overstated—this still would indicate a profit margin of 15 percent for each Hudson employee provided to AMSA.
AMSA also confirmed that in the most recent financial year, the cost of engaging an employee through labour hire rather than as a direct AMSA employee was approximately 23 per cent higher:
For the financial year ended 30 June 2021—when comparing salary costs spent under the labour hire contract/s to the cost of directly employing the equivalent number of staff—AMSA paid a 'markup' of approximately 23 per cent.
When asked whether they have ever charged a markup of 40 per cent or higher to a federal agency, ManpowerGroup acknowledged that 'it is possible'.
Value for money assessments
Ms Hall highlighted that there are currently approximately 20 panels across the Government which support the provision of labour hire services and that these panels were originally established through competitive processes. Ms Hall argued that:
… [g]iven that they've been established through competitive procurement processes and the pricing and service arrangements are established through those processes, the agencies that have set those panels up will have tested and will be confident or comfortable in relation to value for money.
Mr Yannopoulos submitted that the APS operates in a 'devolved accountability environment', and that the Department of Finance does not undertake an overarching audit process on whether labour hire arrangements provide value for money. He noted that it is the responsibility of delegates within each agency to satisfy themselves that they're receiving value for money.
When questioned about the higher cost of labour hire and its value for money proposition, Mr Hetherington contended that:
… it might be worth paying a premium to secure a workforce that you don't need in the long term rather than bringing on ongoing APS employees. I think that value for money is more than just the cost of something; there are other elements that go to a value-for-money consideration[.]
When asked whether a 25 per cent premium paid to labour hire companies, in order to 'circumvent' the employment obligations associated with ongoing APS employment, delivers good value for money under the Commonwealth Procurement Rules, the APSC stated that that it 'does not provide direction or guidance for agencies in relation to use or cost of labour hire'.
Ms Enders from AMSA highlighted for the committee that, in AMSA's experience, labour hire firms generally charge a conversion fee for labour hire employees which transition to permanent APS jobs. She noted that the cost is generally based on a percentage of final salary.
In responding to questions taken on notice, AMSA clarified that under the ManpowerGroup contract it currently has in place, the conversion fee is a reducing amount of approximately $6500 to $3500 per employee, and is applicable over the first six months for ManpowerGroup–sourced labour hires. AMSA noted that nil fees were payable for labour hire workers who were transferred from the previous contract AMSA had in place with Hudson, which ended in April 2021.
This contrasted with the experience of Services Australia, with Mr Nelson stating the following when questioned about labour hire companies charging fees when a labour hire worker is converted to a Services Australia worker:
That certainly hasn't been our experience. I suppose what we do is offer employment to people and, in the case of someone who's applying from a labour hire business, whatever arrangements they have with their employer, those arrangements stay with them. We certainly don't pay an additional fee for engaging someone as an APS employee if they have been a labour hire person before.
Lower conditions and progression opportunities
Some inquiry participants highlighted that labour hire arrangements provide lower conditions and less progression opportunities for workers. For example, Ms Donnelly stated the following in her evidence to the committee:
Labour hire workers are excluded from Commonwealth enterprise agreements, and the Fair Work Act limits the use of enterprise agreements to regulate labour hire arrangements and employment conditions. This results in a category of workers with no effective access to bargaining and no job security and often being paid less with fewer conditions and fewer rights.
In its submission to the inquiry, the CPSU articulated its concerns regarding labour hire arrangements in further detail:
These people do not receive sick, personal, annual, or any other leave entitlements, creating challenges to work-life balance and limited flexibility in planning breaks and time away. This can lead to fatigue and cause further flow-on effects on the efficiency and capacity of the overall workforce.
Permanent APS employees access pay increases through their Enterprise Agreement and annual incremental advancement. People working on these labour hire contracts are not entitled to yearly incremental advancements, or other pay increases negotiated through the Enterprise Bargaining process.
Labour hire workers at AMSA expressed numerous concerns about the impact of their employment arrangement on their mental and financial wellbeing. One worker, Tara, said that being engaged through labour hire for 3 years without receiving an offer of direct employment or even a pay rise, had made her feel undervalued, stressed and had impacted her self-esteem. Another AMSA worker, Justine, said being engaged through labour hire 'diminishes your worth' and creates financial uncertainty. Multiple workers raised concerns about obtaining a home loan or paying off a mortgage while being engaged through labour hire.
Although noting that the ATO requires all its labour hire providers to ensure that they're paying their employees in accordance with the relevant award, when asked whether the ATO's outsourced labour hire workers receive the same pay and conditions as its internal employees who are doing the same work, Mr Chapman said:
There are varying and different conditions around leave and all sorts of elements of the employment contract, so I can't give you an assurance as to all the individual employment arrangements of the different providers. I can't give you that assurance, I'm afraid.
Mr Chapman also submitted that, in instances where the ATO receives a complaint regarding conditions and pay, it 'follow[s] up with the provider and seek assurances as to the matters that have been raised in any complaint to ensure that appropriate arrangements are in fact in place'.
However, when asked about media reports going back to 2018 that ATO call centre workers engaged by outsourced provider Stellar were being paid just $20 an hour, while Stellar received a rate per employee from the ATO of approximately $50 an hour, Mr Chapman said he was not familiar with those arrangements.
Mr Chapman was also asked about evidence provided by ATO employees about their experience working alongside labour hire casuals. Specifically, that labour hire workers have been unable to attend ATO Christmas parties as they need to save money for the closedown period, when they wouldn't be receiving any income, and another instance where a labour hire worker was in tears at a bus stop because a power outage had closed the office for the day, leaving her with no pay. Mr Chapman responded that, 'with labour hire contractors, we are not the employer'.
Evidence provided by an ATO member of the CPSU who worked for an outsourced provider shared similar concerns to those engaged through labour hire:
I worked for an outsource company for the ATO on a casual and full-time basis for one year. Conditions, training, pay, and management expectations are unrealistic. Staff turnover was high. We were constantly being told the ATO was fining them and therefore new KPIs were being implemented. I now work for the ATO where conditions are much better but it is only on a casual contract basis, so job security is still terrible.
Evidence given by a former labour hire worker at the NDIS added that NDIS employees were being paid up to $10 an hour more than their labour hire counterparts for the same jobs, and that labour hire agencies prohibit their employees from discussing their pay.
When asked whether they are ever asked by Commonwealth agencies to match non-salary related conditions offered to their own employees, such as permanent employment, paid leave entitlements or superannuation rates, ManpowerGroup, which is the labour hire provider for AMSA, indicated that they are not.
The issue of training opportunities for external workers, and how they compared to those provided to internal staff, was also raised during the inquiry. Responding to questions regarding this, Mr Hetherington said that it would depend on the nature of the procurement. For example, he stated that if the purpose of engaging contracted support was to acquire a certain skillset, then the APS would not be looking to upskill those contractors. Alternatively, he submitted that:
… where we bring in casual labour through labour hire firms, and if you think about the surge context, we certainly would be looking to upskill them in the activities and the jobs we need them to undertake.
Commenting on whether the labour hire workers engaged by Services Australia receive the same training as those employed directly by the department, Mr Nelson said:
… what we do … in terms of engaging labour hire people, and other new people, is put them through the same level of training and give them the same level of support, so that they can deliver the same quality outcomes for the Australian community. If we are neglectful in that way, we'll hear about that from the public and we won't be able to deliver and meet their expectations.
APS employee members of the CPSU said that the widespread use of labour hire was creating significant training and capability issues. A Services Australia employee said:
The training gaps are becoming quite obvious. The idea that you can replace the knowledge held by experienced APS staff by labour hire staff following ‘blueprint’ instructions will end up costing our customers, and the taxpayer a damn sight more than what it was ever worth.
This sentiment was echoed by employees of the NDIA, who said:
I have trained 8 people in the last 18 months who have all left before they were skilled enough to be useful. We still don’t have these positions filled and are about to do it all again. I am facing burn out due to the increased workload and the extra work of training staff who ultimately do not contribute to the team.
The CPSU submitted that labour hire workers are limited in their career progression opportunities, and that this makes it difficult for workers engaged under these contracts to plan their long-term career. It also contended that these arrangements encourage individuals to find other jobs with higher security, resulting in constant recruitment and training due to heightened turnover.
Notwithstanding the above, Mr Bruch argued that his teams were telling him that labour hire is a pathway to permanent employment. Specifically, when questioned on this issue by the committee, he said the following:
Anecdotally, my teams are telling me—we believe that labour hire is a pathway to permanent employment. We tend to see workers starting in roles in the on-hire workplace and then moving into permanent positions. It's differentiated by those more junior positions and those which are specialist IT, where individuals have committed themselves to a career of project activity; that's where they've looked to specialise.
Summary and concluding comments
This chapter has provided a discussion of the employment arrangements within the APS, focussing on the impacts of casual employment and the utilisation of labour hire contractors and outsourced providers.
The evidence provided to the committee clearly states that the use of external employment arrangements has increased, in part due to the Australian Government's arbitrary ASL cap and is delivering significantly worse outcomes for the external workers, the APS employees who work alongside them, and the Australian residents and businesses who depend upon effectively delivered public services.
It is also clear that these external arrangements do not deliver cost savings for the Australian taxpayer. While the agencies have highlighted that external and casual workers are cheaper and easier to hire and fire, labour hire companies and outsourced service providers have been allowed to pillage the public purse through excessive profit margins, meaning not only is the Australian public receiving a degraded quality of service, they are also paying more for it.
There is a lack of transparency around the engagement of labour hire and other external workforce arrangements in the APS, and it is particularly concerning that a centralised record of labour hire headcount and expenditure is not recorded by either the APSC, or the Department of Finance.
AMSA's revelation that their labour hire arrangements are 23 per cent more expensive than direct employment is troubling, particularly if this markup rate is reflected in labour hire arrangements across the APS. The contention by the APSC that such markups deliver value for money because they make it easier to hire and fire workers as needed is the clearest indication yet that the APS is not being managed in the best interests of APS workers or taxpayers.
The next chapter, Chapter 13, complements this chapter by focussing on procurement by the Commonwealth and its impacts on job security. Chapter 14 takes an in-depth look at the National Broadband Network, while Chapter 15 brings together the content covered in chapters 11 to 14, and provides a discussion on potential reforms, and the committee's views and recommendations.