The Albanese government has quietly shelved the controversial definition of an external public service workforce it once wielded to accuse the former Coalition government of spending $20.8 billion on a massive 'shadow workforce'.
Definition Shift Alters the Financial Picture
A long-awaited audit of Australian Public Service (APS) employment for 2023-24, published by the Finance Department last week, shows a 15 per cent reduction in the use of contractors, consultants, and labour hire. This equates to 3,896 fewer full-time equivalent positions compared to 2021-22 figures.
However, the latest audit notably omits a key category: 'outsourced service providers'. These are firms that deliver services like Defence base support, health services, cleaning, and facilities management across government. This category constituted the bulk of the previously cited $20.8 billion expenditure.
Excluding these outsourced providers, the Coalition's spending in 2021-22 would have been approximately $6.5 billion on an external workforce of 25,866 full-time staff. This contrasts sharply with the 53,911 figure and $20.8 billion total Labor had repeatedly cited.
Political Attacks Based on Broader Definition
Finance Minister Katy Gallagher had aggressively used the inaugural 2021-22 audit to criticise the Morrison government's outsourcing, particularly during the 2025 election campaign. In March, she stated the Coalition had "54,000 external labour hire workers for the public service... a hidden shadow workforce that they didn't want to talk about."
That original definition included 28,045 outsourced service providers, who accounted for 69 per cent ($14.3 billion) of the total $20.8 billion external workforce cost. The remaining workers were contractors, consultants, and labour hire staff.
New Figures Show Savings and 'Progress'
The 2023-24 audit, which focuses solely on consultants, contractors, and labour hire, puts the current external APS workforce at 21,970. The government claims this demonstrates progress in reducing reliance on external labour, saving an estimated $500 million over two years in these categories.
A spokesperson for Senator Gallagher stated the government is "delivering on its commitment to reinvest in the public service" after a "decade of underinvestment and outsourcing." They highlighted $5.3 billion in savings from external labour and other non-wage spending delivered last term, plus the conversion of 11,800 external labour roles to public service positions.
The Finance Department cautions that the 2021-22 and 2023-24 audits are not directly comparable, as agency reporting was incomplete in the earlier year. It suggests the initial figures for consultants, contractors, and labour hire may have been underestimated.
The government has committed to bringing more core work in-house, aiming for $6.8 billion in savings over the next four years from reduced spending on external labour and non-wage expenses.
