Administrative guidelines for labour hire and professional services: Do they lead to the modern government we need?

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The Victorian Government’s new guidelines for labour hire and professional services will impact how public sector organisations use these external services – VPS capability uplift or ‘efficiency measures’?

On 1 July 2019 the Victorian Government implemented two new Administrative Guidelines for labour hire and professional services:

  1. Administrative guidelines on engaging Labour Hire in the Victorian Public Service, and
  2. Administrative guidelines on engaging Professional Services in the Victorian Public Service.

guidelines for labour hire and professional services

In the words of the Victorian Government:

“We’re reducing the use of labour hire and professional services such as consultancies to make VPS jobs more secure and build the internal capability of the VPS.”

The administrative guidelines for labour hire and professional services came into effect in July, but all mandated government public service bodies and public entities – those that are mandated to comply with Victorian Government Purchasing Board (VGPB) policies – must have transitioned to (and be compliant with) the new rules by 1 October 2019.

The administrative guidelines for labour hire and professional services now apply to all such engagements made under:

  • the Staffing Services State Purchase Contract (SPC)
  • the Professional Advisory Services SPC
  • the Legal Services Panel SPC
  • the Marketing Services register, and
  • the eServices Panel.

They also apply to any engagement, even if it’s with a provider that is not on a current SPC panel or register, that applies to one of the service categories in the SPCs.

The guidelines don’t apply to professional services engaged to undertake, service or advise on built environment and infrastructure work, such as construction, infrastructure, engineering or architecture.

Both guidelines provide a lot of detail on the conditions for labour hire or professional services to be considered. They also provide details on when exceptions can be considered.

Principles of the guidelines

The core principle of the administrative guidelines for labour hire and professional services is that professional services and external labour should not be engaged to undertake work identified as a universal and enduring public service function. A departmental Secretary or agency CEO must approve a procurement for an external service provider to deliver such a function.

Enduring public service functions are defined as the work products and services that are intrinsic to the running of the public service and delivery of government priorities.

While specific enduring public service functions can vary, the guidelines identify the following universal functions that should be resourced using public service employees as a first principle:

  • policy and program development, implementation and evaluation
  • business case development
  • business strategy and organisational development
  • external stakeholder/community engagement and facilitation, and
  • internal meeting and event facilitation.

Valid engagements

Recognising that professional services can play a legitimate role in the VPS, and will continue to be needed to ensure delivery of government priorities, the guidelines for labour hire and professional services identify that professional services engagements should be limited to the following circumstances where:

  • the work requires technical or specialist skills or expertise that are not efficient to recruit or maintain within an organisation
  • there is a need for genuine independence
  • the engagement connects the VPS with the latest technical advances, emerging key skills or expertise that over time can be transferred into the public sector to build capability, and
  • the work requires capacity due to unpredictable demands that require immediate or time-critical action, such as emergency management or critical events.

A few thoughts from Mia

The introduction of these guidelines for labour hire and professional services, it must be said, is all rather interesting.

On the face of it, we certainly support the need to uplift the capability of public servants in core areas of government. In fact, over the years it seems the public sector has grown into a batch of expert generalists.

We do need public servants who are expert in strategy, policy and program design and delivery in core areas where citizens expect governments to get the basics right. These include justice, human rights, health, security, education and protecting democracy. To deliver these we need public servants who are subject matter experts, experts in public sector values and experts in policy development, procurement and probity.

However, in our view these administrative guidelines fall short of effecting any real change and instead seem more of a short-term measure to help the budget bottom line; that is, the measures outlined in the guidelines seem transactional only.

We base this view on:

  • recent efficiency targets published in the 19/20 State Budget
  • the carving out of a large spend on consultancies and contractors in the construction and infrastructure environment, and
  • the lack of any mention in either guideline of an accompanying delivery model to increase VPS capability in the areas called out.

Indeed, the recent state government budget outlined a range of efficiency measures that will total about $1.8B over four years. As quoted in the budget papers: “The government will deliver a range of further efficiency measures from 2019-20 supported by a comprehensive program of expenditure reviews undertaken across all portfolios.”

In our annual budget blog we foreshadowed these ‘efficiency measures’ would be likely to impact the number of contractors and consultants engaged by the government; and so it has proved. However, interestingly, these administrative guidelines do NOT apply to professional services in the construction and infrastructure environment, where government is experiencing its biggest spend…

Not using contractors and consultants does not in turn drive an uplift in capability. Instead, an unintended outcome may be that some initiatives are simply not progressed. To really get benefits from the uplift of VPS capability, government needs to look at its delivery model.

For example, are we making the best use of technology that includes data science/analysis and  shared systems? Do public servants have the right skills to utilise such technologies? And, even more importantly, does the structure of government and processes within government enable this? (For example, cross-functional participation which we do understand is a focus of the OneVPS Program.)

On 19 August, the Prime Minister made a speech around the need to reform the processes and structure of government. He made it quite clear that he believes the public sector (specifically at a federal level) needs to challenge the way things are done and adapt to meet evolving challenges, whether they be economic, societal, technological or geo-political. This is just as relevant for the Victorian public sector.

The Prime Minister went further and detailed three areas that need to be addressed for the public sector to meet these challenges:

  1. Governments need to better tap the skills, insights and energy from more people than simply those who have worked within the public sector
  2. Governments need to break down the bureaucratic silos and hierarchies that constrain the capacity to fix problems; they need to be more joined up internally and flexible in responding to challenges, and
  3. Governments must embrace greater use of digital technology to drive greater efficiencies and innovation internally, as well as to create seamless and instantaneous connections to answer questions, make payments and deliver services.

While all states and territories are also tackling the same challenges in improving their own public sector operation, they are each doing it their own way. In Victoria, the government has embarked on the “One VPS” program to examine similar challenges as outlined by the Prime Minister. That is, how to evolve to a contemporary public service that is responsive to changing needs.

While no one would disagree with the Prime Minister’s point of view, it will be interesting to read the soon-to-be-released Thodey review of the Australian Public Service to see how the above three themes can be implemented in practical terms.

Whilst the Thodey review is about the federal public service, you can be sure that each state and territory will be reading it closely to see what they can take out of it too. Who knows, perhaps we may have a consensus across the top two levels of government on what should be done and how it should be done to create the public service that politicians expect and citizens deserve?

In the meantime, we watch with interest this capability uplift program in the VPS and hope it can achieve a broader vision to deliver a modern government, rather than just a thinly disguised efficiency dividend focused on a narrow slice of the government’s expenditure.

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