The former Coalition government spent just under $2 billion on outsourcing tech work in the public sector in its last year in office.

The Australian government’s audit of employment found that in the 2021-22 financial year, the then-Morrison government spent $20.8 billion on external tech labour hire in the public sector, accounting for 37 per cent of the total public service.

According to the data, more than one in four dollars spent by these entities for departmental purposes went towards external labour hire.

The audit examined the use of contractors, consultants, outsourced service providers and labour hire across 112 public service entities.

Labor pledged to cut the use of consultants and contractors by the Commonwealth in the run up to last year’s federal election.

Finance Minister Katy Gallagher said the Coalition government had been “plugging gaps” as a result of its own “arbitrary cap on the number of government employees”, which led to the creation of a “shadow workforce”.

“The Morrison government maintained its artificial cap on public servant numbers, promoting a mirage of efficiency, but were at the same time spending almost $21 billion of public money on a shadow workforce that was deliberately kept secret,” Gallagher said.

“The Australian public service and those who work within it perform a critical role in our democratic system and should be valued by government.

“Labor is committed to rebuilding the APS, its capability and ensuring that jobs that need to be done are delivered, where appropriate, by public servants.”

The majority of this outsourced work was used for ICT and digital solutions, with $1.9 billion spent in the last financial year.

In its last year, the Coalition spent $1.3 billion on contractors alone for tech work, along with a further $429 million on consultants and $146 million on labour hire. Photo: Australian Government Audit of Employment

Defence not included

This figure is also likely significantly higher, as Defence – by far the largest user of external work – was unable to provide detail on the type of work completed by these workers.

The audit does show that Defence has about 4,500 people on external labour hire agreements working in the tech space.

Just under 45 per cent of all expenditure on external labour hire was used on tech projects within the public service.

Of this, $36 million was spent on consultants and $1.3 billion went towards contractors.

The biggest users of these external tech workers was the Department of Social Services, followed by Treasury, and then the Department of Health.

Overall, the Department of Defence was by far the biggest user of external labour, accounting for nearly 35,000 of the total 53,900 external workforce.

After ICT and digital solutions, service delivery was the next most popular use of these workers, with $764 million spent in 2021-22, followed by portfolio work accounting for 9 per cent of the overall spend.

Gallagher said there is still room for some external labour within the public service.

“The Albanese Labor government acknowledges that there is a role for external labour in the APS but, where it is used, it should provide a clear value-add and not simply to plug holes created by an ideological obsession to gut the APS,” she said.

The Labor government has also promised to cut outsourcing in the public service by $3 billion.

The audit marked the first time data of this type and extensiveness has been collated by the federal government.

There have already been movements to reduce the reliance on outsourced work within the APS.

Late last year around 1,000 IT contractors working at Services Australia were cut after being taken on during the COVID-19 pandemic.