The shift from committed and capable Australian Public Service (APS) staff to labour hire, consultancies and information and communications technology (ICT) firms has generated profits for multinational corporations, but undermined APS capability, wasted expenditure on poor value for money ventures and weakened public service delivery for Australians.

The APS is a foundational institution of Australia's democracy and its proper functioning is essential to the prosperity and security of all Australians.

In late 2019, the Independent Review of the APS (Thodey Review) found that the APS needed 'a service-wide transformation', encompassing both short-term change and long-term reform, in order to achieve better outcomes and more efficiently serve the Government, the Parliament and the Australian public.

The committee agrees with the observation made in the Thodey Review that although the APS is not broken, it is not performing at its best. The COVID-19 pandemic has shown this to be a prescient observation, and one which has not been properly heeded by the government.

The committee has concluded that there is a pressing need for the APS to pivot away from the damaging trend of outsourcing core, ongoing public service work. The hollowing out of APS capability through privatisation and externalisation must stop. Evidence received indicated that the Average Staffing Level (ASL) cap has led to a systemic overreliance on labour hire and contracting arrangements within the APS. This widespread and unnecessary externalisation is eroding workforce capability and leading to poor service delivery outcomes.

The committee is also concerned by the overreliance on external consultants for policy advice. The role of the public service in providing 'frank and fearless advice' to government is one of the key characteristics of a properly functioning Westminster democracy. When the Government, despite access to a skilled and independent APS, consistently chooses to spend exorbitant amounts of taxpayer money on commissioning strategic policy advice from private consulting firms, public sector capability is undermined.

Evidence before the committee indicates that the APS must be sufficiently funded and resourced to allow it to excel at essential service delivery for the Australian community and to perform its other vital national interest functions. The APS should focus on rebuilding and investing in in-house skills, systems and people to restore its capability and reach its full potential.

The committee is of the view that action and investment is urgently needed to halt APS capability erosion and to ensure that the long-term capacities and skills of the APS are properly developed, retained and safeguarded well into the future.