Government devastates contractors, vendors and recruiters with Gershon approval

Stan Beer
Monday, 24 November 2008 12:55

IT Policy - Government Tech Policy

The Government will establish a Ministerial ICT Committee as part of its new ICT razor gang approach.
 
The Government will reduce the number of ICT contractors by 50% phased in over 2009, 2010 and 2011.  This modifies the timeframe recommended in the review to align the schedule of reductions with other initiatives to build ICT capability within the Commonwealth.
 
ICT Review Teams will work with agencies to deliver reductions to agency “business as usual” ICT budgets, saving around $400 million annually once fully implemented. Half of these savings will be reinvested to improve agency ICT capability, according to the Government.
 
Lindsay Tanner said: “This savings exercise will be done in a way that does not impede service delivery to citizens and businesses. Reductions averaging 15% for larger agencies and 7.5% for mid-sized agencies are expected and achievable.”  
 
The staged roll out of the Review’s recommendation will commence immediately in line with the implementation strategy proposed by Sir Peter Gershon.

Recruitment service providers were hard to contact as this report went to press but yesterday Duncan Thomson, general manager of Finite IT Recruitment, one of Australia's largest IT people providers, told iTWire that it was doubtful whether the Government could achieve the Gershon recommendations quickly.

"I don't think in reality they'll be able to achieve their objectives soon, this initiative will need to be carefully thought through and detailed planning will need to be put in place.  This is bound to take some time to work through," Mr Thomson told iTWire.

"The Federal Government has always been a large user of contractors. Contracting has some clear advantages over permanent employment and not everyone will want to convert. The challenge of recruiting specialist IT permanent staff in Canberra is also quite tough. When we're staffing for the Federal Government, we're pulling people from all over the country."

Particularly hard hit will be IT recruiters that rely heavily on their contracting business. Australia's largest IT recruiter, Peoplebank, 11 months ago paid $100 million for rival recruiter Ambit, which derives 97% of its business from IT contracting with a strong focus on the Government sector.

While most members of the ICT industry had been expecting the Government to take on board some of the Gershon measures, few had been expecting it to swallow the recommendations hook, line and sinker. This latest action is likely to reinforce in the minds of many in the business community the increasing sense that the Rudd Government has little grasp of the long term implications of its actions and is simply engaging in populist policy making on the run.