Labor defends plan to save $6.4bn by cutting more consultants as experts call it a ‘lazy option'

The Guardian

29-04-2025

Labor's plan to save $6.4bn by slashing the government's use of consultants and external labour over four years is a 'lazy option' that could 'risk some reduction in service levels', according to the former public service commissioner Andrew Podger.
This is despite Labor's claim the savings measure – which would require a re-elected Albanese government to increase the amount of core work being conducted by public servants – would not impact government services.
The treasurer, Jim Chalmers, and prime minister, Anthony Albanese, defended the savings target while campaigning in Brisbane on Tuesday, when the pair faced questions about how the $6.4bn target would be achieved and whether it was an example of 'cooking the books' to justify expensive policies.
'When we came to office the public service was hollowed out with too much spending on contractors and consultants,' Chalmers said. 'We have already made big savings in this area and what we announced yesterday is to continue to build on essentially Katy [Gallagher's] great work.'
When the $6.4bn target was announced, Gallagher said Labor had found $5.3bn in similar savings during its first term in office. This included a rapid scaling back of consultants following a scandal involving PwC Australia. Labor has forecast savings of $2bn a year in 2027-28 and 2028-29. The savings also include 'non-wage expenses' such as travel.
'What we're cutting out is some of the waste,' Albanese said, adding some public servants had left their roles to earn more money with consultants advising the government.
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Podger, who spent almost four decades in the public service and is now a professor of public policy at the Australian National University, said there was no reason to doubt the $6.4bn figure but criticised how it would be achieved.
'While I think the savings can be made, the measure is really just a repeat of the lazy option of increasing the efficiency dividend on administrative expenses,' Podger said.
Helen Dickinson, a professor of public service research at UNSW Canberra, said the $6.4bn in savings was a 'worthy target' but also warned achieving this 'may not be a straightforward process.
'It is true that in 2021-22 an audit found the Australian public service spent $20.8bn on outsourcing and consulting, so theoretically it may be possible to cut this amount further,' Dickinson said.
'But this figure doesn't just include consultants, nearly 70% of this figure is outsourced services. If these are brought back in house, there may need to be some work done to build capability and deliver these functions.'
When the savings were announced, the finance minister said 'we have no doubt that we will be able to deliver those savings without impacting importantly on the services and the programs that the Australian public service provides'.
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Podger said any reduction in consultants and external labour would need to 'be offset by in-house employees, perhaps at slightly lower cost, if service levels are to be maintained'.
'I would hope that, in practice, either side would look more carefully at where efficiencies can be found, such as in the top-heavy nature of too many agencies, and through careful investment in new technology,' Podger said.
Albanese visited three seats in Brisbane on Tuesday – the Greens-held Griffith, Liberal-held Bonner and Labor-held Moreton – as his campaign maintains a rapid pace in the final rush to Saturday's poll.
The prime minister toured a housing development under construction in Griffith, where he again blamed the local MP, the Greens' housing spokesperson Max Chandler-Mather, for holding up legislation to build more social and affordable homes.
Albanese later pressed the flesh with locals while grabbing lunch at Market Square in Moreton, his second campaign stop at a crowded public space in as many days.
The prime minister also stopped to congratulate his Canadian counterpart, Mark Carney, who was on track to win his own election.
Carney and his predecessor Justin Trudeau's tough approach to dealing with Donald Trump was considered a major factor in a stunning turnaround in support for the Liberals, who appeared headed for a thumping defeat prior to Trump's return to the White House.
Asked about Carney's stance on Trump, Albanese – whose campaign has sought to tie Peter Dutton to the US president – said: 'Mark Carney has stood up for Canada's national interest, just as I stand up for Australia's national interest.'