SENATE

Wednesday, 1 March 2017 Senate Page 17
Defence numbers. I am particularly interested in some reported remarks that you have made on the question of
contractors. In an article on 20 February in the Canberra Times it was reported that you said that the number of
contracts is now outnumbering the Public Service workforce in the department. I am wondering if that is the case?
Mr Richardson: No, it is not. That is an inaccurate report. The number of service providers plus contractors
and consultants would outnumber public servants. There is nothing unusual in that. We only have an estimate of
the number of people employed by service providers. With service providers, you enter into a contract for a
particular service to be delivered, and the number of people who they employ to deliver that service is their
business. We do not determine the number they employ. For instance, the garrison service contracts we have.
That’s catering. Service providers include caterers and people who mow lawns. It is people who do the full range
of looking after bases. The three areas in which most service providers deliver people are in the area of estate
management, capability acquisition and sustainment, particularly in the maintenance and sustainment side of a
house and, thirdly, in ICT. With consultants, again, you enter into a contract with a firm to do a particular job.
The number of people they employ to do that job is their business. We do though the numbers of contractors. At
the moment it is around 700.
Senator KIM CARR: Has that changed in recent years?
Mr Richardson: Yes, it has. The number of contractors has pretty much doubled in the last 12 months.
Senator KIM CARR: How do you account for that?
Mr Richardson: I am not entirely sure. Let me put it in context. Any suggestion that APS goes down and
contractor and other numbers automatically go up is just dead wrong. Let me put in context. As I mentioned in my
opening comments, in the four years from late 2012 we downsized by about 5,000 people. You cost a public
service in defence, including on-costs, utilities and the like, at approximately $125,000 per person. So 5,000
people is roughly $625 million, I think. I would say that we have not taken all of that out of the cost structure of
the organisation and fed back into capability. But I would say we have taken between 400 and 450—around about
$400 million—out of our cost structure. The remaining $125 million has probably fed back into outsourcing, et
cetera. So there would be an element of that in the increase in contract numbers.
Senator KIM CARR: Thank you for that. I will put a series of questions on notice to get a breakdown of the
changes. That will cover the issue rather than go through that level of detail. The article reported that you were
considering capping the amount of money Defence could spend on consultants after the numbers nearly doubled
in less than a year.
Mr Richardson: No, contractors nearly doubled. I did not say that consultants nearly doubled.
Senator KIM CARR: So that was just a mistake by the reporter?
Mr Richardson: Well, I did not talk to the reporter, so whoever spoke to the reporter made a mistake.
Senator KIM CARR: They got it wrong. Okay. Is it the case that you are intending to cap the amount of
money that is available for contractors?
Mr Richardson: No, for consultants. We can control contractors through numbers. With consultants, the best
way to control it is through money. The Defence committee took a decision earlier this week to reduce the money
available to consultants from 1 July this year–that is, next financial year–by 10 per cent.
Senator KIM CARR: About how much is that?
Mr Richardson: I would need to take that on notice.
Senator KIM CARR: Are there any further actions being taken in regard to consultants?
Mr Richardson: We will control consultants through the allocation of monies.
Senator KIM CARR: But the question of public service capability is a long-standing issue within the APS. Is
it your view that the department's capabilities have been run-down where you actually have to employ consultants
for work that has traditionally been done by public servants?
Mr Richardson: There would be limited instances of that, but it is not systemic.
Senator KIM CARR: What sort of instances?
Mr Richardson: Clearly, if you reduce your workforce by over 22 per cent that does have an impact on what
you can and cannot do. So inevitably there would be some instances where we would have engaged consultants
where previously we might not have had to do so.
Senator KIM CARR: It has been my experience in other portfolios that they have had a reduction in public
service numbers and an increase in the number of consultants. Often the consultants fees are undertaken by expublic
servants at higher rates. Is that the case in Defence?
FOREIGN AFFAIRS, DEFENCE AND TRADE LEGISLATION COMMITTEE