Is Gershon's contractor cull a furphy?

Summary:Canberra apparently has two plagues: kangaroos and IT contractors. After years fattening up on Canberra's fields, they've been marked by the government for a major cull. But is the latter group still the problem they once were?

commentary Canberra apparently has two plagues: kangaroos and IT contractors. After years fattening up on Canberra's fields, they've been marked by the government for a major cull. But is the latter group still the problem they once were?

It's no secret that thousands of IT contractors have passed through Canberra's dreary government buildings over the past few years.

According to the Gershon report recently published, in 2007 there were 10,000 IT workers employed by agencies under the Financial Management and Accounting Act; 79 per cent were based in Canberra and 3,000 were contractors.

Now that Cabinet has accepted Gershon's recommendations it wants to cut the use of contractors by half by 2011. It sounds like a daunting task and the government gave itself one more year to achieve the target.

The challenging [objective] is going to be implementing the recommendation to reduce IT contracting by 50 per cent by 2011

People Bank COO Peter Acheson

However, if you believe industry spokespeople that have gained by Canberra's reliance on contractors over the past few years, there will major resistance. Contractors who had been paid over $180,000 a year probably don't like the prospect of being paid public sector wages, which are around half what a contractor could expect.

Norman Lacy, CEO of IT contractor industry group ICTRA has said the recommendations would result in a flight of contractors to the countries where they are still in high demand.

Peter Acheson, the COO of People Bank, a major supplier of IT contractors in Canberra, also reckons the government will have a tough time meeting its objective.

"The challenging [objective] is going to be implementing the recommendation to reduce IT contracting by 50 per cent by 2011, particularly if we're in a tight candidate market where the laws of supply and demand have an impact on the ability to attract people into permanent roles," Acheson told ZDNet.com.au.

But is Canberra today really the same territory that was surveyed by Gershon?

According to Acheson, 2007 was a "bull market" for People Bank. "We would say that 2007 was a bull market — probably the strongest IT market nationally and in Canberra that we have seen," he said.

During the period that Gershon's report covered, agencies in Canberra had been on the cusp of completing major IT upgrades. Centrelink, the Department of Immigration and Citizenship (DIAC), the Australian Tax Office, Customs and others, had competing timetables at a time when the world's economy and demand for all high-level skills was running white hot.

Besides competing with the general market, federal agencies, it turned out, were bidding up the price of IT contractors; at least that's what DIAC's CIO Bob Correll said was behind its request for $25 million on top of the $496 million it already had for its Systems for People IT refresh.

In the face of an almost certain rise in unemployment, the public sector is starting to look like a very attractive option

If Gershon wanted to weed out unnecessary labour costs, then an easy target would be to stamp out the habit of creating competing schedules which then drive up the cost of skills.

The question now, is whether Canberra is still facing a shortage. According to People Bank's Acheson, the answer is no.

"Right now there isn't. Canberra has been fairly flat for the past nine months," he said.

So will Gershon's recommendation to cut contractors by half really be a major achievement for agencies? Or is it just a neat platform to criticise the previous government's record on economic management while creating a likely easily achievable target?

The first question was answered when the world woke up the icy words 'global financial crisis'. In the face of an almost certain rise in unemployment, the public sector is starting to look like a very attractive option. As far as the second question goes, Lindsay Tanner has certainly taken the opportunity to use it to criticise Howard's years. Meanwhile, according to People Bank's Acheson, Canberra has already spent five years working towards this goal.

"The truth is that federal government for the past five years has been trying to convert a lot of ICT contractors to permanent staff, with the exception being when they have large project-based work," he said.

Topics: Government, CXO, Government : AU

About

Liam Tung is an Australian business technology journalist living a few too many Swedish miles north of Stockholm for his liking. He gained a bachelors degree in economics and arts (cultural studies) at Sydney's Macquarie University, but hacked (without Norse or malicious code for that matter) his way into a career as an enterprise tech, s... Full Bio

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