Around 1,000 IT contractors at Services Australia were let go last week just ahead of the release of the government’s new MyGov app, with rumours circulating in Canberra that more cuts will arrive in the new year as the government looks to reduce reliance on consultants and contractors.

A spokesperson for Services Australia said the contractors were taken on during COVID-19 for the delivery of projects like the Welfare Payment Infrastructure Transformation and the Residential Aged Care Funding Reform.

“These projects have now come to an end,” the spokesperson said.

“This means up to 1,000 ICT contractors are ceasing over the next few weeks. All impacted contracts will end in line with the relevant terms and notice periods.”

Services Australia administers services like Centrelink and Medicare and helps run the myGov platform.

Former contractors have expressed concern that it might be difficult to find new work given hiring slowdowns over Christmas and New Year.

Services Australia thanked the contractors for their work which helped “significantly bolster [its] ICT systems to meet unprecedented demand”.

“These contractors are highly skilled professionals, working in a high-demand field in the current tight employment market,” the spokesperson said, adding that Services Australia has reached out to other government agencies “who may be in a position to offer new opportunities”.

Opposition government services spokesperson Paul Fletcher called the contractor cull a “missed opportunity” to further build on Medicare and Centrelink, accusing Government Services Minister Bill Shorten of being a “luddite” who wants to see more permanent Australian Public Service (APS) staff not because of the job security they provide, but rather because it would mean more union members.

“This hit to digital service delivery is revealing,” Fletcher said on Monday.

“The Albanese Labor Government is shifting resources away from more efficient and customer-friendly digital service delivery to the paper-based, over-the-counter work modes of the past.”

Shorten this week unveiled a new myGov app, which has taken some 18 months to put together and aims to be a one-stop-shop for accessing government services.

The app includes a wallet for credentials like Centrelink concession cards and COVID-19 vaccine certificates, with the addition of Medicare cards coming soon.

Labor went into the May election promising to cut the APS' reliance on contractors and consultants.

A senate inquiry into the APS last year recommended that the government “apply greater scrutiny in the awarding of ICT contracts” in order to give Australian companies a better shot of competing with multinational consultants and to “ensure that technical capacity is built within the APS”.

Services Chief Information and Digital Officer Charles McHardie told that inquiry the APS had a “fifty-fifty split” between contractors and staff but that there was a push to shift the dial toward having “70 per cent APS technical workforce, 30 per cent contractors”.

He boasted his agency had “the largest in-house ICT capability in federal government”, most of which were focused on designing and writing code, and the “largest SAP workforce in the Southern Hemisphere”.

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