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Transcript of interview with Adam Shirley: ABC Canberra: 9 August 2018: Labor's plans for the public service

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SUBJECT/S: Labor’s plans for the public service

ADAM SHIRLEY: The Federal Opposition will get rid of a staffing cap for federal

government agencies and cut the current spend on private contractors for public

services if it wins the next election. So says the Opposition's Finance

spokesperson Jim Chalmers, who's with us on mornings now. Mr Chalmers, thank

you for your time.


you going?

SHIRLEY: What's the main mentality behind this, and how have you budgeted for


CHALMERS: The main mentality for it is that we want to see better services for

Australians, we want better advice to governments, and we want better value for

money for taxpayers. What we've got right now is the situation that you've just

alluded to, which is a Government which has this sort of arbitrary staffing cap on

the public service, which means more and more agencies are looking to bring in

outside workers, whether they be contractors, labour hire, consultants and the like.

That spending has blown out by many billions of dollars. So what we're proposing

today is to rein that spending on contractors and consultants and labour hire, to

reduce spending on travel, and to use some of the proceeds of those savings to

invest in permanent Centrelink staff to undo some of the damage of the additional

efficiency dividend...

SHIRLEY: Which was supported and opened up by Labor in fact in its years in

Government. When you were in Government, you absolutely supported that


CHALMERS: Yeah, and I talk about that in the speech today Adam, that I'll be

giving shortly at the ANU. Which is to say there has been a role for more efficiency

in the public service - the efficiency dividend has been applied by both sides of

politics as you rightly point out. But at some point, I think those kind of blunt

instruments, whether it be that one, or the arbitrary staffing level cap, they have

become counterproductive - not just because they compromise services, which is

the most important thing, but also because it forces people into doing things which

are counterproductive; those false economies around employing more and more

people from outside the public service, which costs more and delivers less to


SHIRLEY: You say that spending on that has blown out, but blown out compared

to what? Previous spending on consultants, which under this Government is then

counted by a reduction in permanent wages, which does improve that bottom-line

when you spend on public services?

CHALMERS: Well it hasn't been a direct swap. So the spending on outside

workers has blown out by billions of dollars. I'll give you one example which would

be of interest to your listeners. If you just take labour hire itself, labour hire

spending - and labour hire, remember, is supposed to be about filling short-term

needs, but instead it's become this permanent fix to get around the staffing cap -

it's tripled under this Government.

SHIRLEY: How does that match CPI though and standard inflation, because it

would go up anyway?

CHALMERS: Well CPI's a couple of percent and we're talking about a 300 per

cent increase in spending on labour hire. It was $308 million in the first year of the

Government, and now it's something like $1.1 billion. So it's more than tripled. I

think when people around the country are frustrated by unanswered calls at

Centrelink or all of those sorts of things - the poor delivery of services, that's before

we get to some of the other issues in the public service - I think they'd be very

frustrated to know that more and more of their money is being spent on inferior


SHIRLEY: What proof do you have that shows removing the Average Staffing

Level cap will improve the efficiency of the public service, and what it will actually

give to every Canberran and Australian?

CHALMERS: That's the right question, Adam.

SHIRLEY: Well, thank you, Jim Chalmers!

CHALMERS: No, I think that's important. Because sometimes when we talk about

the public service, we talk about it in an impersonal, institutional, structural way,

and obviously the structures are important. But at the end of the day, we should

always be thinking about what does this actually mean for people in suburbs and

towns around Australia. What we're saying is that the ASL cap - the Average

Staffing Level cap - has compromised services. Because if you take things like the

National Disability Insurance Scheme, it has prevented it getting up and running as

fast as we would like in the interests of people with a disability because it's got this

artificial cap. We're not saying we want to have some kind of free-for-all on public

service spending; on the contrary. We're saying that, whether it be the NDIS or

other agencies, they should be able to determine their own spending, within a cap

on spending they should be able to determine their own staffing...

SHIRLEY: So they'll still have an overall Budget and they have to stay within that,

but you're saying should Labor win and become Government, you'd give those

departments more of a decision on how they hire and who they hire?

CHALMERS: Precisely, and that will mean better services, but it will also mean

better value for money. Because it will stop incentivising people from having to go

outside the public service to pay for expensive labour hire contractors and


SHIRLEY: The cost for the forward estimates, if this cap is removed, as it currently


CHALMERS: There won't be a cost for removing the cap. What we're proposing

today beyond that the cost of restoring the last year of the efficiency dividend is

$394 million. The cost of 1200 extra Human Services staff is $196 million. That will

be more than offset by what we're proposing to do on travel and contractors and

consultants. And what we're saying today is that well in advance of the election we

will provide the specific numbers, once we have those properly costed up.

SHIRLEY: Ok, so the costing is not completely not done at this point. Do you have

an idea of how much you'll cap consultancy fees? Because it sounds like that

effectively what you'll do.

CHALMERS: We will impose a percentage cut when we rein in the spending on

contractors and consultants. The final decision on that number will be made closer

to the election when we get a sense of the other spending and taxing plans that

we'll take to the next election. But it will more than offset what we're proposing to

do with the DHS staff and the efficiency dividend.

SHIRLEY: Jim Chalmers is the spokesperson for the Opposition for finance. Soon

he'll formally announce that Labor would remove the current staffing cap that exists

on the Australian Public Service. He's explained that on Mornings right now on

ABC Radio Canberra. You will say in your speech that Labor will make sure

Australians know exactly how much money is being spent on external contractors

and consultants. How will you make that information available?

CHALMERS: As it stands right now, it's very hard to get a handle on spending

because the Government deliberately wants to make that not especially


SHIRLEY: Well that's your contention. That would not be the contention of the


CHALMERS: That's the problem we're trying to fix. I'm just starting with the

problem we're trying to fix. What we're saying is if you make that more transparent,

you give people a simplified, reportable version of what each department is

spending on labour hire and contractors and consultants, that will incentivise

people to get those costs under control.

SHIRLEY: How will you allow the APS to bring in consultants when they deem it

necessary? When a Department wants that expert assistance?

CHALMERS: They can do that within their overall budget, and I'll say in the

speech and I've said multiple times in the consultation for this speech including

with some of the consultants who do work for the Commonwealth public service:

there will always be a role for external expert advice. We're not proposing to

eliminate that. We're proposing to rein in the spending that has blown out under

the Government. But there'll always be a role for it. Agencies will be able to

commission that work, but their budget is capped and they will have a greater

capacity when the staffing cap is removed to bring some of that expertise in house.

SHIRLEY: We've mentioned Centrelink, the National Disability Insurance Scheme

as well. Is Labor also proposing to prioritise departments or services that might

need extra recruiting or extra services; fund provided to them?

CHALMERS: I think Centrelink and the Department of Human Services are really

the most pressing need there. That's why we've made them our highest priority in

what we're announcing today with the 1200 extra permanent public service staff. I'll

tell a story in the speech about how if you go to Alice Springs there's a line outside

the local member's office of people who sit in a little room in his electorate office on

the phone waiting to get through to Centrelink. That's not because the people of

Centrelink are doing a bad job, they just have substantial resource constraints.

People around the country are getting very frustrated. There's been something like

55 million unanswered calls to Centrelink in the last year where we've got available

data. So that's a big problem; that's a really high priority for us. So yes, in what

we're proposing today, we will prioritise them.

SHIRLEY: Jim Chalmers, more detail to come when you provide this speech at the

ANU today. Thank you for being with us on mornings ahead of that discussion to

tell us what Labor's plans will be for the public service and spending on it.

CHALMERS: Thanks for the opportunity, Adam.