New South Wales Labor says it will save the state’s budget $1.6bn by slashing the use of private labour hire, claiming government expenditure on third-party workers has grown more than $1bn over the past decade.
On Monday, opposition leader Chris Minns will announce Labor would cut the use of private external contractors by a quarter if it wins election later this month, vowing to reinvest the extra savings into health and education spending.
Labor said it had commissioned an analysis showing the use of contingent labour had grown by 19% a year since 2016, reaching as high as $1.8bn a year in the current financial year.
It said its own analysis showed labour hire costs would reach $2bn a year by 2025, after the NSW auditor general last week released a report which found $1bn had been spent on private consultants since 2017.
The auditor found in many cases departments did “not procure and manage” the cost of private consultants effectively, and most “do not have a strategic approach to using consultants, or systems for managing or evaluating their performance”.
During his campaign launch speech on Sunday, Minns also said he would cut back on the use of consulting firms.
“We’ll end that exorbitant waste, we’ll find savings to make sure our public services run better. The truth is it’s far too top heavy, and the money must be directed where it’s needed – to those who deliver the services,” he said.
Ahead in the polls less than three weeks out from the 25 March state election, Labor is seeking to paint the Coalition as reckless on spending. When Dominic Perrottet finally ruled out further privatisations after weeks of Labor pressure, the opposition accused the government of racking up billions in gross debt over its ambitious infrastructure pipeline.
Minns said while Labor “recognises that we will have to work with the private sector in government” he wanted to prioritise getting “the budget back under control while reinvesting the savings to repair our schools and hospitals”.
“We will only spend within our means, not make promises no one believes and government can’t keep,” he said.
The analysis on labour hire costs shows the use of third-party firms is predicted to hit about $2.1bn by 2025, up from about $700m in 2016.
The shadow treasurer, Daniel Mookhey, said the use of third-party labour had seen the public service “run by a shadow army of non-permanent workers”.
“With a severe shortage of critical workers across NSW, Mr Perrottet is spending an enormous amount of taxpayer money filling ICT and administrative tasks with temporary workers,” he said.
“The Public Service Commission said as early as 2017 that contingent labour should only be used when it is the most efficient and effective option available to respond to an agency’s business needs. It also recommended that agencies use contingent labour when informed by proper workforce planning.
“Premier Perrottet and his treasurer have not done the work to comply with these recommendations.”
The proposed $1.6bn saving would be used to fund previous Labor commitments to create 10,000 fixed teaching roles.
It comes after Labor announced a suite of measures aimed at public sector workers at its campaign launch on Sunday, including a$76m promise to encourage students into healthcare by offering $12,000 subsidies on university as well as a $93m commitment to hire 1,000 apprentices in government-owned entities like Sydney Water.
