Federal Finance Minister Lindsay Tanner today said the government would implement the recommendations of Sir Peter Gershon's ICT Review 'in full', including cutting its IT contractor workforce by half.
"The staged roll-out of the review's recommendation will commence immediately in line with the implementation strategy proposed by Sir Peter," Tanner said today in a statement.
"This decision represents the most significant change in the use and management of ICT in the Australian Government to date. We will act decisively in applying Sir Peter's recommendations," he added.
Sir Peter Gershon and Lindsay Tanner.
(Credit: Brian Hartigan)
One of the top issues addressed in the review was agencies' reliance on IT contractors, which Gershon reported cost on average $186,000 per annum or twice the amount a public sector employee could expect under the Financial Management and Accountability (FMA) Act.
The review claimed that up to 20 per cent of staff in some agencies had been converted from permanent to contractors, which affected agencies' skill base but also posed a risk since contractors stood outside the standard performance management system. Gershon estimated that 23 per cent of the government's current ICT workforce were contractors.
"This is a turning point, rebalancing the highly-decentralised ICT administration in government and focusing on efficient and effective ICT expenditure and management," Tanner said.
But while Gershon had recommended making the cuts to contractor levels by 2010, the government has given itself to the end of 2011 in order to avoid disrupting current project schedules.
The savings to come from reducing contractors and Gershon's broader recommendations are expected to be $400 million a year, but will only kick in once the changes are fully implemented, according to the minister's statement.
"This savings exercise will be done in a way that does not impede service delivery to citizens and businesses. Reductions averaging 15 per cent for larger agencies and 7.5 per cent for mid-sized agencies are expected and achievable," said Tanner.
Norman Lacy, executive director of ITCRA — an organisation which represents Australian technology recruiters, denied the government over-relied on contractors and disagreed with the reported average cost of them.
At today's announcement Lacy predicted a flight of contractors to countries where they were still in demand.
"The reality is that these people are very much in demand in other countries. There will be a flight to those counties to continue their contracting because they will continue to earn at the rate they're earning now," he told ZDNet.com.au.
Lacy said that a beneficiary of the government's contractor cull would be the private sector, which has in recent years competed with the public sector for skilled IT staff.
"Look, the private sector in Australia will be rejoicing. They don't have to compete with the government for skills. They will be able to engage them much more easily because the Commonwealth has walked away from a significant source of highly skilled ICT professionals," he said.