​Turnbull warns against outsourcing too many government services

Prime Minister Malcolm Turnbull has warned against outsourcing government services, saying a government could find itself without sufficient internal talent as a result.

"I am not an unalloyed fan of outsourcing," Turnbull told reporters in Cairns. "I think there is a risk that if you outsource too much of government services, you run the risk that you end up with very little talent or capability within government."

Facing further questions on outsourcing Medicare payments, the prime minister said he has every intention of updating the healthcare service's payments system.

"The Medicare payments system is enormous, obviously, and I believe that we can -- well, it is not a question of belief, there is no doubt that we can -- bring that into the 21st century and do so within government," he said.

"But my decision is that this payments system will be upgraded and it will be upgraded within government."

Turnbull pointed to the creation of the Digital Transformation Office (DTO), which was established early last year when he was communications minister, as proof that he does not wish to head down the outsourcing path.

"It has the culture of a startup but it is within government and its aim is to, within government, transform the delivery of government services, rather than spending enormous amounts of money on big private firms and outside systems integrators and outsourcers," Turnbull said.

"It is a commitment that I am making to all of the elements of Medicare that are currently being provided by government, being provided by government in the future, and that is absolutely consistent with my approach to these issues as demonstrated by my establishment of the DTO," he added.

Speaking on Q&A earlier this week, the prime minister said there was a need to update the 30-year-old payments system and bring government and its services into the 21st century.

"The payment system has to be updated. It has to get to a sort of smartphone era. I think, as we all know, it is pretty out of date. But we will revive it or renew it. We will modernise it but we will do so within government," he said.

"You can see from my deeds, what I'm saying to you is a matter of genuine conviction that what we have to do is ensure that you bring ... government services into the 21st century and you don't do that solely by pushing them all out the door so that there is nothing left inside government. There is a lot of innovation that can be done in government if you provide the right leadership and the right culture."

Turnbull also accused Opposition Leader Bill Shorten of running a "dishonest scare campaign" in the weeks running up to the July 2 election.

"One of the saddest and most desperate things happening in this campaign is the way the Labor Party is telling people, Australians, and in particular ringing up older Australians in the evening and telling them that Medicare is going to be privatised. It is a complete lie," he said.

While in Cairns, Turnbull announced a AU$30 million investment package, which was wrapped in his "jobs and growth" election slogan. Of that AU$30 million, AU$10 million will go towards the creation of the Cairns Innovation Centre.

The AU$50 million centre will be delivered by James Cook University, which Turnbull said will help boost collaboration between researchers and local business and support the commercialisation of the university's research.

"We have been, as Australians ... not very good at collaboration between primary research and industry and business. We've either -- depending on the table -- we're either last or second last in the OECD on this. So it's a big part of our Innovation and Science Agenda, which is part of our national economic plan to promote greater levels of collaboration," Turnbull said.

The remaining AU$20 million from Wednesday's announcement will be used to promote local jobs and investment, which will be used to leverage a further AU$20 million in matched funding, the Coalition said.

Earlier this month, the prime minister found himself accused of talking the startup talk but not walking the startup walk.

So far during the election campaign, Turnbull has promised AU$15.4 million for Australian startups, with the funding to be allocated to expand the existing Incubator Support program, which was given AU$8 million in December as part of the government's AU$1.1 billion National Innovation and Science Agenda.

The concern is that despite startups apparently being the centre of the Liberal's economic plan, sporting facilities in at-risk electorates are getting a better deal from the Coalition's election promises, slated to receive AU$18.5 million if elected. At the higher end of spending pledges, AU$150 million has been set aside by Turnbull to get the ball rolling on Queensland dams.