letaifixit

Government spending · Issue

How much does the Australian Public Service spend on consultants and contractors?

Written by an AI, prompted by a human, checked against the linked sources. Updated 2026-09-08. Spotted an error?

Short answerThe Australian Public Service spent $20.8 billion on external labour in 2021-22, the equivalent of 53,911 full-time staff on top of the official headcount, according to the APS Audit of Employment. About 70 per cent went to outsourced service providers and more than a quarter to contractors and consultants. Cause: staffing caps that limited public servants but not the money to hire them by the hour.
$20.8bn
external labour bill across the APS, 2021-22 (APS Audit of Employment)

What's happening?

  1. In 2021-22 the APS employed an external labour workforce of 53,911 full-time equivalents at a cost of $20.8 billion.Source: Australian Public Service Commission, State of the Service 2023
  2. External labour formed almost 54,000 FTE positions on top of the reported APS headcount.Source: Minister for Finance media release, 6 May 2023
  3. Outsourced service providers made up nearly 70 per cent of the $20.8 billion; more than a quarter went to contractors and consultants.Source: The Guardian, 5 May 2023
  4. The external workforce was equal to about 37 per cent of the actual APS headcount across 112 agencies.Source: Consultancy.com.au
  5. A more recent whole-of-APS figure on the same audited basis: no public figure in this format. The government reports reductions in individual portfolios, but the 2021-22 audit remains the last full baseline we can cite.letaifixit.org note

Why is it happening?

The staffing cap capped people, not money.

An average staffing level cap limited how many public servants could be employed. It did not limit the labour-hire budget. So the work moved to hourly contractors at a higher rate, and the headcount looked flat.

Source: APSC, Rebalancing the APS workforce

Contractors are invisible in the annual reports.

Until the 2023 audit, nobody had a whole-of-government count of external labour. Agencies reported staff, not the shadow workforce beside them. What is not counted cannot be cut.

Source: Minister for Finance media release, 6 May 2023

Capability was outsourced, then had to be bought back.

Once a department stops employing its own IT, policy or project people, it has to rent them at market rates forever. The cost is the premium between a salary and a day rate, times 54,000.

Source: ABC News, 6 May 2023

How would you fix it?

Ranked by how much of the problem each one removes, in the AI's opinion, based on the facts above.

  1. Publish the external labour count every year, per agency, in the annual report.The 2023 audit proved it can be done. Make it a standing line item: FTE and dollars, split into consultants, contractors, labour hire and outsourced providers.
  2. Set a cap on external labour spend, not on headcount.Replace the staffing cap with a total-labour budget. Managers then choose the cheapest way to get the work done instead of the way that dodges the cap.
  3. Require a 'why not a public servant' statement for any contract over 12 months.Long-running contractor roles are permanent jobs with a markup. Force the justification into the open.
  4. Bring core capability in-house first: IT, procurement, policy.Those are the roles where the day-rate premium is highest and the knowledge loss hurts most.

What fixing it could save?

$0.4–0.8 billion
a year, low to high. OUR estimate, not a government figure. Built from the linked sources and the assumptions below.
  1. Start from the audited $20.8 billion external labour bill, of which more than a quarter (about $5.2 billion) went to contractors and consultants (government figure, 2021-22).Source: The Guardian, 5 May 2023
  2. OUR estimate: 25% (low) to 50% (high) of that contractor and consultant slice is long-running work that could be done by public servants.Source: APSC, Rebalancing the APS workforce
  3. OUR estimate: a public servant costs about 30% less than the equivalent day-rate contractor once overheads are included. $5.2bn × 25–50% × 30% = $0.4–0.8 billion a year. The outsourced-provider 70% is left out: some of it is genuinely cheaper outsourced.letaifixit.org note

Every line marked OUR estimate is an assumption made by an AI for this experiment. Government figures are marked as such and linked. Change the assumptions and the range changes; that is the point of showing them.

Questions people ask

How much did the APS spend on consultants and contractors?

$20.8 billion on all external labour in 2021-22, per the APS Audit of Employment. Consultants and contractors were more than a quarter of that; outsourced providers about 70 per cent.

How many contractors does the Australian government use?

The audit counted 53,911 full-time-equivalent external workers in 2021-22, on top of the official APS headcount.

Is there a newer figure?

No public whole-of-APS figure on the same audited basis has been published. We will update this page when one is.

How much could be saved by fixing this?

Our estimate is $0.4–0.8 billion a year. It is an AI's estimate built from the linked public figures and stated assumptions, not a government number.

Written by an AI, prompted by a human, checked against the linked sources. This page is opinion generated by an AI model from the linked public sources. It discusses public bodies, programs and policies, never private individuals. It is an experiment, not journalism or advice. Full disclaimer · Request a correction