Govt stopping the contractor recruitment gravy train

Sean Walters writes about a proposed change to contractor recruitment by the Government :

• Recruitment agencies will no longer make margin on Contractors. Instead, a set fee (based on one of two job families) will be invoiced on start date. This will be for a maximum of 12 months, and pro rata’d for anything less.
• Recruitment agencies will however be able to charge a (no doubt miniscule) payrolling fee, and this will continue after 12 months providing they continue to payroll the contactor
• Temp to perm fees (or as they call them “Conversion fees”) will cease to exist in any meaningful way
• Recruitment agencies are to propose their best rate for this up-front contractor fee without collusion with any other agencies
• Recruitment agencies, warned of this change on the 5th August, have until the 2nd September to fundamentally turn their revenue model on its head, pick a competitive fee without knowing what the market is doing, and write a presentation on how they don’t mistreat refugees throughout the hiring process.

Now I have sympathy for the industry that one month is far too short a time to implement such a massive change.

But as a taxpayer I am all in favour of this change. A huge amount of taxpayer money goes to contractor recruitment companies, even when they don’t do the recruitment.

It seems that many government agencies are not set up to “employ” contractors directly. So any contractors have to be contracted through and paid through a recruitment company.

What this means is that the recruitment company gets paid around $20,000 to invoice the Government and pay the contractor, even when the Government agency found the contractor themselves. They get paid the same for a contractor that the agency recruits as they do for one the recruitment company recruits.

It’s fair enough to pay a fair whack to a recruitment company when they have invested in having a pool of contractors on their books. But to pay them the same amount for what is simply a purely administrative function – pay them and invoice us, is wasteful.