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Government aims to reduce reliance on contractors and boost public sector capabilities.
The Australian government has just taken an important step away from relying on contracted work as it has brought home AU$49 million or US$32.32 million worth of technology services, a move in the country's bigger effort to streamline operation and refocus core work within the public sector that Finance Minister Katy Gallagher has championed.
A comprehensive strategy under the Strategy Commissioning Framework launched in October 2023 requires all government agencies to identify their core functions to bring these back under public sector control. The report indicates that during 2024-25, AU$527 million worth of work, such as ICT and digital services, will be brought back under government agencies from external contractors. ICT and digital services form 22% of the entire group.
The move is critical for the management of critical services, especially in the technology sector, by the government itself, said Gallagher. According to her, the transition is in support of the achievement of the budget post-election savings target of $4 billion through spending reductions on consultants, contractors, and labor hire.
One aspect of the long-term plan to strengthen the Australian Public Service (APS) through internal capabilities is the phasing out of contractor services. Under the Framework, 67 public service departments and agencies cited ICT and digital services as core work but have often outsourced their delivery. This phase-back into in-house provision is thus likely to cut outsourcing considerably.While most government sectors are expected to see a reduction in contractor dependency, the Department of Defence will continue to have a mixed model. Despite contributing to a large portion of the overall AU$527 million reduction, the Defence Department is likely to maintain a contractor-to-staff ratio of approximately 60:40, according to Defence Chief Information Officer (CIO) Chris Crozier. The Department of Defence has yet to provide a full breakdown of how the funds will be allocated across various job families.
Minister Gallagher highlighted the broader economic impact of this move, stating, “This is a critical step towards making the public service more efficient and capable of delivering essential services without over-reliance on external contractors.”
This shift to bring work in-house aligns with global trends where governments are re-evaluating outsourcing models, especially in critical sectors like IT, data management, and service delivery.
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