​Australia's innovation department spent AU$14.7m on IT contractors in 2017-18

The Department of Industry, Innovation and Science has forecast spending AU$14.7 million on 126 contractors and has kept tight-lipped on whether that money next year will be spent on upskilling existing staff instead.

The Department of Industry, Innovation and Science has revealed it had 126 contractors working for its Digital Strategy and Operations Division solely on IT-related tasks during the 2017-18 financial year.

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The contractors -- usually engaged for short-term projects or time specific activities, or where there is a need for specialist IT skills -- is forecast to cost the department AU$14.7 million.

"The Digital Strategy and Operations Division spent AU$5.2 million on fee for service outsourced ICT services in 2016-17. The department has been successful in converting contract staff to ongoing APS [Australian Public Service] staff," the department said.

"For example, in 2015-16, 18 contractors were converted to ongoing APS staff, achieving a saving of AU$400,000 per annum. A further three contractors working on the ICT Service Desk were converted to ongoing APS in 2017-18, saving AU$80,000 per annum."

The information was revealed in response to questions on notice from Senate Estimates in May, after the Economics Committee asked department representatives if there was any truth to reports the public sector was becoming deskilled, particularly where technology was concerned.

During estimates, DIIS said it was currently in the process of considering its digital strategy going forward, saying the "right mix" of capability would depend upon the future digital strategy.

Citing remarks made by former CEO of the Digital Transformation Office -- now the Digital Transformation Agency (DTA) -- Paul Shetler, Labor Senator Chris Ketter, said he was worried that as the government has outsourced technology over the last 40 years, there's been a progressive deskilling of the public service.

"The reliance on consultants is remarkable and the amount spent on them is eye-watering. That's just not necessary if we reskill the public service," he continued.

Responding to a question on whether DIIS agrees with Shetler that there should be a cap on outsourcing in technology-related areas and a cut in departmental expenditure on IT consultants, and instead having the savings fund internal staffing and capability, the department said it needs to set its strategy before setting capability in order to deliver that strategy.

"That will change over time. I don't think there's any exact formula that applies to every department. It really depends on each department and its agenda going forward," the department said.

"Our policy within the department is that our capabilities should match our strategy, and that's something that we keep under continuous review and that we change from time to time.

"Historically, we have attempted to move in-house some of those ICT labour hire contracts that we have had, so there has been some success in recent times, in the ICT field in particular, in switching from labour hire contracts to bringing those in-house."

The senator also highlighted that the Department of Human Services (DHS) and the Australian Taxation Office (ATO) have attempted to bring digital skills in-house rather than outsourcing, and have both reported providing an "efficiency dividend".

The ATO revealed during Senate Estimates in March it coughed up a "peak" of AU$333 million during 2016-17 on labour hire, outsourcing, and specialist contractors, with many charged with rectifying the work backlog caused by IT outages.

DHS has also stood up a cadet program for university leavers and focused its workforce appointments on cybersecurity specialists.

Shetler has been vocal on his distrust in government service delivery since he left the DTA, commenting early last year, for example, that the error rate in the Centrelink "robo-debt" data-matching process was so "unfathomably high that it would send a commercial enterprise out of business".

"The justifications that have been given I think are just another example of the culture of 'good news', reporting only good news up through the bureaucracy," he said at the time.

"I'm sure that the bureaucracy was being told at every single level that everything was OK. That's how it works in the bureaucracy. Bad news is not welcomed, and when bad news comes, they try to shift the blame."

Prime Minister Malcolm Turnbull in May announced a review into the Australian Public Service (APS), seeking mainly to understand whether those staffing Australia's government departments are capable of ushering in the "next wave" of digital.

"The APS has a long history advising successive Australian governments and serving the Australian people well, but a range of global, technological, and public policy developments are transforming our economy and our society, presenting both opportunities and challenges," Turnbull said at the time.

"The APS needs to be apolitical and professional, agile, innovative, and efficient -- driving both policy and implementation through coherent, collaborative, whole-of-government approaches. It must have the capability to meet core responsibilities and deliver functions, and to understand and deploy technology and data to drive improvement."

That followed the DTA partnering with the Australian Public Service Commission to create a more agile and technology-focused public service workforce.

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