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ASU Tax Officers' Branch


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Australian Services Union
Taxation Officers Branch
116 Queensberry Street
Carlton South 3053
Ph. (03) 9347 6080
Fax: 03) 9347 8781

Branch Secretary: Jeff Lapidos
Ph. 0419 335 675

Mr David Thodey AO


Independent Review of the APS

Department of Prime Minister and Cabinet


Dear Mr Thodey

The Australian Services Union shares coverage of the Australian Taxation Office with the

Community and Public Sector Union. The ATO is the only part of the APS which we cover.

Our submission is based on our long experience working with the ATO and its employees.
We trust it will be of assistance to you.

Yours sincerely

Jeff Lapidos

Reconsider the ASL Cap, contracting out and the degradation of APS careers

Contracting out of APS work needs rigorous assessment

A principal issue for the Review to consider is how the public service can ethically, efficiently

and effectively work with private sector partners in the provision of public services. The

public service has devolved from unified ownership and delivery of end to end services into

a role, which whilst still ‘owning the outcome’, has many partners in the delivery of the

service. Close relationships between individuals is often a key driver in the maintenance of

these business opportunities. From policy development to service implementation and

governance there are now partnership arrangements with multiple suppliers of goods and

services. There needs to be more rigorous assessment of their purpose and value.

APS principles are at risk from contracting out

The merit principle is the cornerstone of an effective and efficient public service.

“It is threatened by the increased use of consultants, contractors and labour hire
staff. If these people are engaged to do work that is indistinguishable from that
usually performed by public servants, the gates will be opened to corruption,
nepotism and political patronage.”*

“We believe it is wrong in principle for consultants and contractors to be engaged in
standard line positions in the public service, and for them in turn to then to fill
subordinate positions with people from their own consulting and contracting firms,
all without regard to the APS principles.”*

Consultants, contractors and labour hire staff are not covered by the APS Values and Code

of Conduct. “They owe their fundamental loyalty to another employer.”*

This undermines the APS Values. We especially fear the extensive use of outsourcing

arrangements in specialist areas such as IT services and technology, call centre operations

and now in taxation compliance work.

We now have SES officers who believe their tenure is finite. Many have service partners

who are personally loyal to them. This can influence decisions on contract value and/or

performance. Current rules and regulations are designed to prevent this behaviour. But it

still occurs. It may be innocent, but it does create the perception of bias, favour and

fraudulent conduct.

Service partners understand the game and will not bite the hand that feeds them. This is

not consistent the principles behind the Public Interest Disclosure Act. It is the Department

or Agency that is responsible for any slippage or non-delivery. Wat is not delivered in the

current contract term will often be included in the contract extension, be costed again and

therefore be paid again by the public.

The ability to bring back or renew service providers is a powerful motive when responsible

SES are under pressure to deliver as expeditiously as possible. This can be done without

effective oversight or external assessment of the process. It would be useful for the Review

to determine how many new contracts have resulted in a simple extension of that

contractor/vendor once they are established.

We doubt third party providers deliver long term value

The growth of third party providers, from individual contractors to large scale vendors,
means the assessment of value for money in the APS also require the assessment of value of

its procurement, contract and vendor management practices. The assessment of value for

money delivered by established providers should include the cost of their removal and

transition to a new provider, plus all the associated service and continuity risks. This is not

generally the preferred option, particularly when managers are judged on service continuity,

not service cost. No one is rewarded for avoiding a crisis or saving money. But there is

praise for fixing something that has broken.

The opportunity for APS managers to become join service providers is not conducive to

getting the best outcomes for the public. Where are the rules that prevent SES joining

service providers after leaving the APS? Inside knowledge means vested interests have an

opportunity and capacity denied to others. They have advantages other bidders for

contracts do not. There is no transparency in these decisions as far as the public are


Accountability and leadership: the increased role of third parties.
Accountability for policy and service delivery should have criteria for both success and

failure. These should include service availability, and failures/outages, financial and

contractual outcomes. The measurement of efficiency and effectiveness where there are a

welter of sometimes competing objectives can result in risk averse managers. Their priority

is not to expose themselves, their department/agency or the government to adverse

scrutiny. This is part of a growing trend to engage tier one consultancy firms to be a partner

in a new initiative so they can say that it was developed in accordance with industry best

practice. APS leaders may engage contractors to overcome perceptions that public service

processes and their people are not as capable as third parties in providing solutions. This

creates higher costs when they are being engaged as a form of insurance.

Cap on average staffing level is counter-productive

The policy that caps public service Average Staffing Level numbers provides the opportunity

to demonstrate a smaller public service. However there is no smaller government once you

add on all those private sector partners, just fewer directly employed public servants. The

Policy prevents Departments using direct employees, despite having the budget to do so.
Instead these ‘surplus funds’ are used to engage third parties to meet budgeted objectives.
Contract staff work alongside public servants, often doing exactly the same work types, but

under very different salary scales and conditions of employment. Sometimes the contract

staff have inferior pay and conditions and in specialist areas they may have markedly

superior salaries, if not conditions.

Capped wages

Government Policy has capped the salaries off APS personnel and eroded their conditions of

employment. This does not provide a stable platform for public services to evolve in a

meaningful way. Public servants can see roles they perform being undertaken by

contractors and consultants who receive higher incomes. Many public servants no longer

see public service as a career choice. Many see the public service as being a stepping stone

to expertise that can be leveraged for greater remuneration in employment with a third

party provider. This is leading to the abandonment of a commitment to a professional and

respected public service.

The capping of salaries through successive APS bargaining policies has not led to better

public service outcomes. The substitution of consultants/contractors/labour hire for FTE to

maintain an artificial ASL (Average Service Level) is a false and misleading economy. The

number of public servants may be lower, but the cost to government is higher. As there is

little transparency about this substitution there is no effective public debate on this critical

topic. The ASU has not even been able to find out what Awards or Enterprise Agreements

cover the employees of the ATO’s third party providers.

If people are interchangeable between the public service and its third party providers, what

are the qualities that would make being a public servant unique, desirable, a career, a

vocation or just another job?

Public sector wages are lagging behind comparable industries. This wage stagnation is

leading to public service career stagnation. The golden hand-cuffs of defined benefit

superannuation schemes now apply to less than 50% of APS employees. So there is now

less incentive to become or remain a public servant.

If the conditions of employment of the public sector are continually driven down, then the

comparative benefit of being a public servant diminishes accordingly. There needs to be an

understanding that public servants are not ‘fat cats’ sitting on their shiny arses. The

propagation of such myths erodes faith and trust in public services. This myth has

fundamentally changed the services the Government delivers for the public.

Distrust of the APS will lead to its destruction

If the Government continues to mistrust the public service and continues the trend of

outsourcing its work, then the public service will become a mere vessel for private sector

contracts for service delivery. If the Government regards nothing as inherently a public

service, then we will travel along a continuum until the public service is merely a series of

steps for private sector delivery of services.

Do you want a professional career based public service?
The ASU does not want to see the development of a public service where private sector

contractors are valued more than public servants. We oppose the belief that private sector

experience should be more highly valued than public service in the promotional process.
Currently the APS leadership is signalling to public servants that their career needs to

include external experience. There is nothing wrong with a blend of public and private work

experience. But many APS professionals wonder about the purpose of being a public servant

when leaders with no public sector experience are appointed and public sector experience is

not highly regarded.

The ASU sees very many highly competent and dedicated senior leaders in the Australian

Taxation Office. The Australian Government and the public should be proud of these

leaders. We see their ability to continue a long tradition of ethical and efficient

administration being undermined by Government Policy that requires the contracting out of

policy advice and services because of the ASL cap, a lack of transparency in the contracting

out of public services and a reduction in opportunities for public servants.

*Paddy Gourley in Canberra Times, 3 July 2018,