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Treasury team charged with assessing options for outsourcing

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A newly-established unit within the state Treasury Department has been given a “broad remit” to find ways to deliver “an equal or better service at a lower cost”, with the State Government open to pursue more outsourcing of public services.

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Treasurer Rob Lucas told InDaily he had established a “Commercial and Economics unit” within Treasury, which has been tasked with streamlining service delivery across government and examining the prospects for “commercialisation and outsourcing” of public services as well as public-private partnerships in infrastructure projects.

It follows last month’s budget foreshadowing the privatisation of the Adelaide Remand Centre’s management – a move that prompted vocal protests from public sector unions.

The commercial and economics branch has been re-established as a Treasury unit after operating within the Department of Premier and Cabinet under the Weatherill Labor Government.

It has a broad remit, including looking at models for “social impact investment”, such as the Aspire Social Impact Bond, a program that, according to its website, “offers investors the opportunity to generate a competitive financial return while making a lasting difference to the lives of people experiencing homelessness in Adelaide”.

The bond funds the Aspire Program, delivered by the Hutt Street Centre in partnership with community housing providers including Common Ground Adelaide and Unity Housing, in collaboration with the State Government.

“The people who handled that [program] in DPC have been moved into the new commercial and economic group in Treasury,” Lucas said.

“I’ve given them a broad remit to have a look at better ways to deliver services at lower cost, including PPPs, social impact investing-type models and Adelaide Remand Centre-type outsourcing – all those sorts of things.”

Lucas insists the unit “doesn’t have a remit of privatisation in the purest sense”, which he defines as the wholesale sell-off of state assets – of which he said SA Water was the only significant option remaining.

“In the continuum of outsourcing, privatisation would be the sale of an asset like SA Water – outsourcing is what we’re doing with Adelaide Remand Centre, where you’ve got a publicly-owned service being privately run,” he said.

Lucas was asked by Shadow Treasurer Stephen Mullighan during this month’s estimates session whether any measures were “currently being considered or developed by Treasury that, if implemented, would involve outsourcing or privatisation”.

I am encouraging consideration in my agency and indeed across the board,” Lucas said in response.

“If we can actually deliver an equal or better service to the people of South Australia and do it at a lower cost, I have no concerns in relation to Treasury.”

The Marshall Government has headhunted Victorian planning consultant Tim Cave into the Treasury team.

Cave’s LinkedIn bio says he specialises in “providing strategic project origination, delivery and leadership advice and services to government agencies and private sector partners involved in the delivery of major public infrastructure, especially through public private partnerships”.

He is currently project director on the department’s SA schools PPP Project, according to his bio.

“What we’re seeking to do is build up an expertise within Treasury, to have a look at more options we might be able to consider in future budgets and budget discussions on how to deliver better quality services at lower cost,” Lucas told InDaily.

“They all have to stack up in terms of the business case.”

He said it was “too strong to say [there’s an] expectation” the recommendations will lead to a broader agenda of outsourcing – with Lucas already flagging privatising the management of pathology and medical imaging services if they cannot meet Government-imposed performance benchmarks.

“[The unit] has a remit to look at all options… are there opportunities where outsourcing the provision of services might be a viable option?” Lucas said.

“If there’s a good business case for doing it, cabinet probably will consider it.”

However, he emphasised, “it’s not an ideological commitment” to private sector management, and would only be pursued if the business case stacked up.

Mullighan told InDaily in a statement: “Rob Lucas drove the privatisation of ETSA in the 1990s and now he’s at it again, actively telling his Treasury officers to look for more opportunities to outsource and privatise government functions.”

“The news that the Liberals are again looking for options to privatise public services and operations will alarm South Australians who are already losing bus and train services, Service SA centres, TAFEs and seeing a prison privatised following the State Budget,” he said.

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