Is Gershon's contractor cull a furphy?

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?

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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

Liam Tung

About Liam Tung

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, security and telecommunications journalist with ZDNet Australia. These days Liam is a full time freelance technology journalist who writes for several publications.

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Talkback

11 comments
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  • WOW

    I can't wait to take a pay cut of over over 100k just to join the Public server at an APS6 level and do the same work!
    This whole thing is a joke. Pay IT people what they are worth and they will go permanent, but advertising for APS6 roles that require years of experience is a sick joke.
    On the plus side I guess I could always go back to the PS and do no work at all...like most Public Servants.
    anonymous
  • Will the greenies be campaigning for the contractors

    Gee, a cull.

    will we see greenies chaining themselves to servers?? to protect the contractors
    howardmg@...
  • About Time

    That the contractor gravy train reached the end of the line.
    Too many contractors who have too little IT knowledge getting paid > 170K a year because they can handle meetings with outsourcers (which is all they do most of the time).
    Threaten to leave the Country if you will, but personally I don't see it happening. Most contractors don't know that there exists a world outside of Belconnen.
    anonymous
  • Envious?

    Sounds like you're a wee bit jealous. If what you say is true then who wouldn't drop everything to become a contractor? $170k for no skills or work - you'd be mad not to.

    Of course the truth is nothing like this. Contracting involves taking risk, having talent and hard work. Anyway, you've missed the boat now.
    anonymous
  • Don't bag Public Servants

    The outsourcing disaster has left many Public service IT staff under skilled and under resourced. It's a credit that they get anything done at all. Like contractors there are good and bad. Simply put $180k contractor (like myself) must have a set of skills that the PS want to buy otherwise we would'nt last long. Mostly we inhabit the projects space where we face long periods between contracts. Public servants get paid every fortnight but have to turn up every day regardless of the work on offer. Contractors when used well act to spread knowledge between departments, used poorly become expensive public servants. Culling the latter is a noble ambition.
    anonymous
  • Successful contractors, yes

    A lot of the general comments assume a contractor is better than those who stay with the Public Service. Some are, some aren't. Mostly, I haven't noticed a difference except when a project dries up, it is the contractor who packs up and leaves for the next journey. That is the risk component and primarily why contractors receive more than the equivalent public servant. It is meant to be temporary.

    Continuing as a successful contractor requires the right skills, including attitude, and hard work on top of job opportunities. During 2006 and 2007 there were more jobs than bods which inflated prices and attracted over-valued contractors who struggled to show appropriate skills. It is the first time I had such poor quality contract staff that I had to let several go. There is a lot of merit in coordinating Government activities to assist the market and not flood it.
    anonymous
  • Reality Check

    The reality is that contractors don't have a lot of the 'below the line' costs that permanent employees do. This relates to about 30% of apparent costs - take out lSL, Annual Leave, Sick Leave accruals, superannuation costs etc that contractors have to fund themselves. So the $180K looks more like $125K.
    That's a little above the EL2.1 level when once consider performance bonuses paid at EL2.1 and above.
    Some of the contractors in Canberrra that I've collaborated with are worth every penny, some aren't. I'd suggest, just like general PS performance, that group probably has the standard distribution of good and bad (the 'bell curve').
    As for the comments about taking a pay cut to APS6 level, my observations are that any contractor worth their salt will get promoted pretty quickly in Canberra, so anyone worried about only getting APS6 money obviously doesn't think much of their own ability..........................
    anonymous
  • Nothing above APS6

    Problem is that a lot of federal gov't departments will not promote a development officer above APS6 level, even in Canberra. If you want to go above APS6 then you have to convert to a management role instead. They talk grand plans of having system architects up to SES level eventually but reality is that APS6 is the ceiling if you want to remain "productive".
    anonymous
  • Why hire a consultant to tell you to stop using consultants?

    Perhaps, if costs are such a big issue in IT, the government can let us know how much the Gershon report cost to produce and in particular how much Mr. Gershon and his staff were paid to produce it?

    I'm guessing that, as the focus of the report seems to be on the conversion of heavily paid "hired-guns" into more reasonably paid permanent staff, all those involved (including Mr. Gershon) were paid at the standard APS6/EL1 level which ordinary IT staff are to be expected to work at?

    I'd certainly hate to think that the government would be so hypocritical as to pay a large slice of tax-payers's money on expensive consultants who end up telling them to stop paying large slices of tax-payer's money to expensive consulants. That would surely be foolish, wouldn't it?
    anonymous
  • Not all contractors are paid highly

    It is a real shame that many departments have outsourced large parts of their IT operations.
    Only the outsourcer benefits, the staff sure do not.

    I used to work for an outsourcer, all they seemed to care about is generating larger margins and treated their staff terrible.

    I now work under the APS, much better pay and conditions.
    anonymous
  • Value?

    So will paying an IT Architect $90,000 per annum get you the best calibre staff? Private industry values skilled IT professionals that command business acumen with technology prowess and will pay handsomely for it. Those contractors that become public servants for less than half of what industry will pay obviously do so for good reason, no prizes for guessing. I hope that the Government ICT Departments know what they are really purchasing with the Gershon approach.
    anonymous