Election 2022: ‘Jim Chalmers got his millions and billions confused’, says Coalition

Opposition Treasury spokesman Jim Chalmers’ pledge to save ‘in the low billions of dollars’ by slashing contractors has been attacked as a miscalculation by the government.

Anthony Albanese and Penny Wong congratulate opposition Treasury spokesman Jim Chalmers after his National Press Club address on Tuesday. Picture: NCA NewsWire / Gary Ramage

Opposition Treasury spokesman Jim Chalmers’ pledge to save “in the low billions of dollars” by slashing contractors has been attacked as a miscalculation by the government, which spent just under $685m on new consultants at the peak of the pandemic.

Speaking at the National Press Club on Tuesday ahead of the May election, Dr Chalmers said Labor would cut costs on contractors and consultants and empower the Australian Public Service to do “more with less”.

Dr Chalmers also flagged an end to Coalition staffing caps on public service numbers, which have traditionally ballooned under Labor governments.

Finance Minister Simon Birmingham said the Coalition has maintained the share of consultancy work at about 1 per cent of total contracts over 10 years, down from 1.3 per cent under Labor in 2011-12. In 2014-15, the Coalition share of consultancy work came in at 0.7 per cent of total contracts.

A Labor spokesman said they had identified more than $5bn in spending on contractors, consultants and labour hire in 2020 but stressed the party was not intending to indiscriminately slash essential contracts.

The overall spend on contractors is expected to naturally taper off after the government engaged consultants to help manage the pandemic response and higher workloads across the public ­service.

Dr Chalmers said because of the Coalition’s arbitrary staffing cap, “many billions of dollars were being spent on labour hire and contractors and consultants in areas traditionally performed by the APS … I spend a lot of time with accounting firms and consulting firms, and they do first-class work and nobody is saying that we end that.

“But there is an opportunity, I think, to have a good look at the spending that goes into that part of the budget, to work out whether we could do more with less,” Dr Chalmers said. “More in terms of capacity, less in terms of spending on contractors and consultants. And I would expect, … that would come up with a saving in the low billions of dollars.”

Senator Birmingham told The Australian it was “crystal clear that Jim Chalmers hasn’t done his homework on this”.

 

“If he can’t get these simple calculations right, how can Australians have confidence in him to manage an entire budget? It’s almost like he’s got his millions and billions confused,” he said.

“Although consultants can complement the capabilities of the public service, particularly for work that is temporary or specialised, the Coalition has seen the share of consultancy work hold at around 1 per cent of total contracts, down from what was 1.3 per cent under Labor in 2011-12.

“If Jim Chalmers thinks it is achievable to cut consultancies to deliver real savings, as opposed to trying to divert the same costs into the public service, he should give several large and credible examples of major consultancy contracts that Labor would cut.”

Last Tuesday’s budget said “with around $685m of new consultancy contracts reported on Austender in 2020-21, this is a relatively small cost next to the $22bn wages bill for the APS, but these investments provide strategic complementary assistance to the APS”.

Dr Chalmers on Tuesday also recommitted to recoup savings from grants funds but fell short of ending discretionary spending.

“We think there is an opportunity to trim some of the discretionary funds, but it’s difficult from opposition without full visibility,” he said.