Public sector jobs boom with 12,000 public servants set to be added
It’s bad news for the big four firms KPMG, EY, Deloitte and PwC, as the Budget reveals how many external consultant roles will be cut in Canberra.
The wages bill for public servants is set to soar more than $2bn as the Albanese government warns it will swell the size of the public sector with a razor gang slicing consultants from government department, despite job numbers tracking ahead of estimates.
But the government has assured Australians it will save money from the expansion of the public service, with the budget papers revealing the Commonwealth has its eyes on the $20.8bn spent on 53,900 external consultants working across the government.
The 2024 budget reveals the Commonwealth wages bill is set to grow by $2.2bn in the coming year, taking total wages spend from $27.3bn to more than $29.4bn in the year ahead.
But a string of spending cost on consultants look set to pose further challenges for the big professional services firms, KPMG, EY, Deloitte and PwC, which have all basked in the glow of a decade of big spending on external labour.
The budget papers reveal public sector numbers are set to hit 209,150 next year, with warnings headcount growth was tracking above earlier estimates.
Public service numbers have surged from 173,142, when the Albanese government took power from the Coalition, with estimates public servant numbers are on track to be almost 36,000 larger than 2021-22 levels.
Public servant headcount now sits at 197,108, almost 5248 above the 2023 estimates for staff numbers.
But the budget papers note public servant numbers were tracking almost 17,000 “below the level that would be consistent with the relative size of the public service” launching off from 2006 levels.
The government notes public servant numbers should be at least 226,000.
The papers note the estimated 12,042 increase in public servants over the coming year will be driven by “the significant investment in staffing in 2023–24 to rebuild service delivery capacity and capability, along with additional contractor conversions since the 2023–24 Budget”.
“This includes resources for Services Australia to remediate the impacts of under-resourcing and reduce backlogs, and for the Department of Home Affairs to improve visa processing capabilities and speed up wait times,” they said.
This comes as the government has pushed forward with its drive to swap out consultant roles for full-time public servants.
The budget warns the government will be targeting spend on major consultants, with spending on the big firms down $624m from a peak in 2021-22.
The government notes its spend on the largest consulting firms was $84m less each month for the first half of the 2023-24 financial year than for the same time in 2021-22.
At least 3314 consultants have seen their roles converted to public service positions this year, in addition to another 3000 jobs in Services Australia, which were previously outsourced but are now being done by public servants.
But the budget warns the government plans to convert a further 2502 consultant roles to the public sector in 2024-25.
“This represents a further rebalancing of the APS workforce to reduce the reliance on external labour where the work can appropriately be done by APS staff,” the budget papers note.
The department of Social Services has been identified as a key area for slashing consultant numbers, with the budget papers noting an estimated 1822 positions should be converted to in-house public service roles in the coming year.
This was compared to Home Affairs, Parliamentary Departments, Finance, and Climate Change, Energy, the Environment and Water, which have all escaped the consultant cutting drive with no estimated conversions next year.
The pullback on spending comes as PwC’s former government consulting business looks to gain ground on its rivals, after being sold for a $1 to private equity players Allegro Funds after scandal engulfed the firm.
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