Outsourcing claim reviews is causing problems for veterans: MPs

A blowout in the use of labour hire companies to fill gaps across the Australian public service has been blamed for contributing to the mental toll of the nation’s war veterans.

Ahead of the start on Friday of the royal commission into defence and veteran suicide, a Senate committee found that 41 per cent of the staff of the Veterans Affairs Department were short-term labour hire workers, with the agency falling well behind its own stated targets to help its clients.

A parliamentary committee has linked the mental toll faced by veterans to a blowout in times processing financial claims by the Veterans Affairs Department due to its reliance on labour hire companies.Credit:Paul Jeffers

The Senate committee examined the rise in labour hire and consultancies across the public service, plus issues surrounding IT and procurement policy. It followed ongoing union and community complaints about the quality of the public service, which was put under a staff freeze in 2015.

As a case study, the committee examined the Veterans Affairs Department, which currently has more than 320,000 clients with an increase since the end of Iraq and Afghanistan wars.

Claims for financial support from veterans has trebled over the past three years with the number of permanent impairment claims doubling over the same period.

While the department aims to resolve claims within 90 days of receiving them, the average waiting time for some claims was now at 218 days. The public sector union said there were 4300 claims more than a year old that had yet to be processed.

The department revealed it used 46 separate labour hire providers in 2019-20 at a cost of $82.1 million. Labour hire staff accounted for 41.6 per cent of the department’s entire staff.

It conceded it needed labour hire workers to supplement its capped public service workforce due to the lift in demand from veterans and their families.

Committee chairman, Labor’s Tim Ayres, said there was an opaque “shadow workforce” being used by departments to fill the gaps caused by the government’s decision in 2015 to cap the number of public servants.

He said the four agencies with the highest number of labour hire workers – Veterans Affairs, Service Australia, the Aged Care Quality and Safety Commission and the National Disability Insurance Agency – were the centre of service failures that had generated “public scandal”.

Labor Senator Tim Ayres said veterans were dying while waiting for their financial assistance claims to be assessed by the Veterans Affairs Department.Credit:Alex Ellinghausen

The situation in Veterans Affairs was of particular concern with the government now commissioning consultancy McKinsey – which has just completed the Coalition’s modelling of its zero emissions policy – to devise a solution to the problems handling veterans’ claims.

“That outsourcing has coincided with a blowout in waiting times for processing liability claims and it’s been a disaster,” he said.

“Veterans are dying waiting for their claims to be processed. Their families, their friends in the Australian public deserve an answer.”

This year’s budget contained funding for 447 additional public service positions within Veterans Affairs to “help improve the efficiency of veterans’ service delivery”.

But the committee was told those positions would only be funded for two years.

The committee made 36 separate recommendations, starting with the abolition of the cap on the total public service workforce. It also called for departments to reveal their contractual arrangements with labour hire companies and consultancies.

Liberal senator Claire Chandler dissented from the committee’s findings, saying they appeared to be a wishlist from the union movement.

But she conceded there were issues inside the public service.

“With over 150,000 employees across dozens of departments and agencies, it is inevitable that there will be occasions when the APS falls short of internal or external expectations,” she said.

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