Defence spending on IT and digital contractors revealed

Defence’s contribution to government spending on IT and digital contractors and consultants was revealed to be $410 million in 2023-24, the first time it’s been specifically costed.

A Finance-run audit of employment [pdf], run for only the second time, puts whole-of-government spending on external labour for IT and digital at just under $1.8 billion, down from $1.92 billion in 2021-22.

Departments and agencies are implementing a government policy to rebuild internal capabilities in key areas, such as IT, and reduce reliance on contractors. 

A key change in the government’s reporting of external labour hire this time around is a dollar figure on Defence spending.

When the audit was run for the first time, Defence was strongly suspected of being the top spender across many categories of external labour hire, but the department did not have granular figures on its spending.

In 2023-24, Defence spent $410 million on ICT and digital external labour, with other big spenders Health and Aged Care ($296 million), Treasury ($176 million), Employment and Workplace Relations ($171 million), and Social Services ($157 million).

Of all types of external labour, contractors were the most common for ICT and digital.

Other changes made between the two audits around calculations and methodologies mean that they are not “directly comparable”, the 2023-24 audit states.

Finance said that further progress had been made since this latest audit on reducing external labour spend.

“The government expects the public service to do more to further reduce its use of external labour,” it added.