3.1
The committee was asked to consider the privatisation of Australia’s visa and citizenship program, including:
the integrity of Australia’s visa and citizenship system,
the commercial implications and increased costs to industry, with particular regard for the tourism and higher education sectors,
the implications to national security, data security and privacy, and
the risk to public sector employment – especially rural and regional employment – through service delivery model changes.
3.2
This chapter addresses these terms of reference by considering whether visa processing is being outsourced, the appropriateness of outsourcing visa processing, impacts on various sectors, issues of security, privacy, service quality and access, and the tender process.
Is visa processing being outsourced?
3.3
The Department of Home Affairs released a market consultation paper in June 2017 which invited potential market providers to submit possible solutions for ‘a new visa service delivery business, including new technologies to help design and build a global digital visa-processing platform’. Following the market consultation paper, the department released a Request for Expression of Interest on 22 September 2017 and progressed to co-design options. On 7 December 2018, the department released the Request for Tender (RFT) Delivering Visa Services for Australia - Global Digital Platform to a small number of respondents that had participated in the co-design phase.
3.4
A decision on the tender was due to be made in October 2019. However, as of February 2020, no decision has been announced.
3.5
The department’s website asserts that the project ‘does not involve privatising Australia's visa system or decision making’. Over the course of the inquiry a number of witnesses disputed this assertion.
The government is proposing to privatise the core government function of visa processing. Their privatised global platform will be how 10 million people a year apply for an Australian visa—tourists, students, work and other categories of visa—and potentially apply for citizenship as well.
3.7
Former Deputy Secretary of the Department of Immigration, Mr Abul Rizvi (private capacity) argued that, while ‘the department and the government remain in control in terms of the legal aspects through the Migration Act’, the project still represents privatisation. Mr Rizvi explained his view, saying:
What is being changed is that the ownership of the platform on which visas are processed will go from public hands to private hands. To me, that is privatisation, pure and simple.
3.8
The department’s representatives argued that the ‘global digital platform’ project does not represent either outsourcing or privatising visa decision-making. Deputy Secretary of the Immigration and Settlement Services Group, Ms Malisa Golightly, said:
As is clear in the publicly available tender documents and in our submission, we are seeking a private sector partner to assist us to build a new platform, which is essentially a workflow tool, to assist in processing visa applications more efficiently and provide our clients with a seamless digital experience…. The department will maintain full responsibility and accountability for policy, security, risk assessment, and visa decision-making.
3.9
According to the department, the private provider will not have any involvement in considering visa applications, and will not ‘undertake any visa decision-making’. The department will decide upon the ‘business rules’ implemented by the new platform, and:
It will determine which questions are asked of which applicants and the work flow process each application will follow. As set out in the tender documents and our submission, refusal decisions or decisions that take away a right or entitlement will only be made by departmental officials; they will not be made by the computer.
3.10
The department also proposed that ‘safeguarding the integrity of the migration system as a whole…and providing advice on the economic and social benefits of migration will always be undertaken by departmental staff’.
3.11
The CPSU questioned the department’s assertion that it would retain total control over all decision-making, providing this example of a student visa:
At the end of the chain would possibly be a department officer but also possibly just an automation process where a technical administrative decision is made to grant the visa based on all of the work and the decisions of the privatised provider. When the department talks about retaining decision-making, what they're referring to is the technical administrative decision to grant the visa.
3.12
Public Sector International (PSI) disputed the government’s definition of privatisation, saying: ‘as soon as the government doesn't run, own or control a service, it is privatised. There are many words that are used to hide what is, in effect, privatisation’.
3.13
The Migration Institute of Australia (MIA) said it was not opposed to the idea of a public-private partnership, as long as the government retains control of immigration policy and process. However, MIA said information released about the project so far ‘raises more questions than it answers’.
Appropriateness of outsourcing visa processing
3.14
Representatives from the department presented a number of reasons for the move to utilise a private provider to design and build a new visa processing system. Ms Golightly proposed that the global digital platform will benefit Australia by:
delivering more accessible and convenient digital services, on any device and in a number of languages;
allowing for matching skilled migrants to employment opportunities;
helping facilitate identification of potential national security threats;
improving the ‘quality, consistency and efficiency’ of departmental decisions; and
removing inefficiencies, reduce manual processing and consolidate information required by decision-makers.
3.15
The department pointed to increasing demand for visa services, which is forecast to grow to more than 13 million per year by 2028-29. This increase, it argued, is ‘beyond the limits of the department's existing capability’.
3.16
The department was asked which methods of procurement were considered as part of the business case. Ms Golightly confirmed that methods including ‘construct only; design and construct; design, construct and maintain; [and] manage and construct’ were all considered.
3.17
The Australian Strategic Policy Institute (ASPI) expressed its support for the procurement method chosen, and argued the project was necessary to resolve the ongoing problem of inadequate resources and personnel. The ASPI submitted:
The new visa reform framework is an innovative 21st century approach to the border security challenge. It engages with the latest thinking in both technology and private–public partnership. That said, continued public discourse and analysis of each phase remains critical to the development of an effective and efficient visa framework.
3.18
A number of stakeholders in the migration sector were concerned that the integrity of Australia’s visa and citizenship system may be put at risk by outsourcing the visa platform. MIA stated that the government ‘has not consulted’ with it and other relevant stakeholders, ‘who have a wealth of knowledge on how a system should be designed to meet its objectives’. Further, MIA was concerned that the privatisation process has not been designed in a way that factors in ‘the complexity and operation’ of Australia’s migration law.
3.19
The Centre for Policy Development (CPD) argued that visa processing is an area of government activity unsuited to outsourcing. CEO, Dr Travers McLeod cautioned that potential damage to Australia’s overseas reputation, and the inevitable loss of government processing capability, made outsourcing visa processing too risky.
3.20
Mr Rizvi believed the department has yet to provide ‘an adequate response’ to the question of why privatisation is seen as a better option than an in-house system. Mr Rizvi argued that the department has not made a clear case for privatising the visa processing system, because:
only simple visas will be automated and these are not where backlogs currently exist;
it is unclear how the privatisation would serve the public interest; and
the department has not made clear how it intends to deal with risks.
3.21
The CPSU suggested that the problems identified by the department in relation to visa processing caseloads could be resolved through ‘increased public sector staffing and investing in the ICT platform’, instead of outsourcing the system.
3.22
Along with other witnesses, Mr Rizvi highlighted risks associated with the fact that private providers are, by their nature, driven to make a profit. He asked:
…given the pressure on the private provider to provide strong returns to its shareholders, how will Home Affairs deal with relentless demands on it to allow the private provider to use the ICT platform to increase profits, but which are negative to the national interest? How can we be confident Home Affairs will be able to resist such pressure, especially as the opportunities requested by the private provider may proceed in small, incremental steps?
3.23
MIA also expressed ‘grave concerns’ about ‘commercialising’ the visa processing system, identifying ‘a tension between integrity and profit’.
3.24
Suggesting the current system ‘works to the national interest’, the CPSU said that public service employees manage decisions ‘in a directly accountable manner’. National Secretary, Ms Melissa Donnelly, added:
The work is undertaken by skilled APS employees of the Department of Home Affairs who have extensive experience in this field and a direct system of accountability through the department to the minister and government. Privatisation introduces a profit motive that puts at risk the integrity of this system. We have seen this with the privatisation of public services before.
3.25
Mr Rizvi pointed to past experiences of outsourcing projects, saying:
There was a very major problem with IT system development in the department when we partnered with IBM in around, I think, 2008-09. That led to a major cost blowout and we did not get the kind of outcome that we were looking for.
3.26
MIA also suggested past experiences were indicative that visa processing is not suitable for outsourcing. MIA referred to the project to modernise the Australian Tax Office’s IT system, and also highlighted the immigration department's ‘now abandoned attempt to modernise the visa immigration system’.
3.27
The Migration Council Australia was concerned that Australia’s system of migration could be negatively affected by the privatisation of the processing system, impacting the economy and society. Ms Wilshire said:
Migration policy is really iterative, because it's a human system and it’s regulating human behaviour. What affects somebody's choice to move can be so varied in terms of global forces in the economy—in the case of refugee movement, anything in terms of war, other pressures or push factors and pull factors—so you're regulating very complex human behaviour. It also has a significant impact in terms of Australia's economy. There's almost no sector of Australia's economy that isn't, in some way, reliant on the flow of skilled migration or the flow of people into Australia.
3.28
Also of concern, according to the Migration Council, is the ‘iterative’ nature of the migration system, and the fact that it deals with vulnerable people, and language barriers.
3.29
The CPSU cited economic concerns with outsourcing visa processing, such as were highlighted by the Australian Competition and Consumer Commission:
Australian Competition and Consumer Commission chairman Rod Sims [who] said that ‘Selling public assets has created unregulated monopolies that hurt productivity and damage the economy.’ Mr Sims cited the sale of ports and electricity infrastructure and the opening of vocational education to private companies as examples of these outcomes. CPSU submits that it would be appropriate for this Committee to inquire deeply into the likely impacts of a monopoly visa and citizenship provider.
Service quality
3.30
The Commonwealth Ombudsman reported on consumer complaints relating to visa processing, which show there were 397 complaints about the Department of Home Affairs in the period July to September 2019. This included 147 issues regarding temporary, bridging and protection visas, and 103 issues regarding citizenship and permanent visas. Common themes of complaints included ‘dissatisfaction with decisions or administrative processes’ and ‘delays in processing times’.
3.31
The department was asked whether services provided through the new system will still come under the jurisdiction of the Commonwealth Ombudsman. Ms Golightly confirmed they would:
As well as that, the tender so far, and the subsequent contract, has very extensive controls, from information-gathering about things like the performance of the provider, the quality; the ability for us to quality-check our work and how the system is supporting that; the ability for others to review our work—for example, the Auditor-General or the Ombudsman.
3.32
The Ombudsman agreed. Deputy Ombudsman, Ms Jaala Hinchcliffe, said the Ombudsman had jurisdiction under the Ombudsman Act 1976 and she was ‘not concerned’ about its ability to oversee contracted service providers in their delivery of public services.
3.33
Ms Hinchcliffe also reiterated the Ombudsman’s view that the Commonwealth ‘can't outsource the risk’, saying:
At the end of the day, coming from a position of dealing with complainants, complainants will not distinguish about whether a decision or process was delivered by an outsourced provider or by the department, so there is a reputational risk to the department as well that they cannot outsource.
Impacts on specific sectors
3.34
Stakeholders in the higher education sector expressed concerns about the outsourcing project. Universities Australia urged ‘care and caution’, saying: ‘We are genuinely concerned that it may have a bad impact on the ability of Australia's universities to recruit students and staff from overseas’.
3.35
Universities Australia provided evidence around the high volume of visa applications from international students and their dependents (473,415 in the 2018-19 financial year), the significant contribution of the higher education sector to Australia’s economy, and the contribution of international student fees to universities’ total operating revenues (23.3 per cent for all universities and 27.5 per cent for ‘group of eight’ universities).
3.36
Chief Executive, Ms Catriona Jackson, told the committee that the current system is working for the sector because the department is able to be ‘very responsive’ to the sector in relation to issues it raises. Ms Jackson said:
I wouldn't pretend to say that it was perfect, but it is robust, it is transparent, it is clear and I think it is flexible enough to deal with—as you've already pointed out—some increases in fraudulent applications from particular places. We're not pretending it's perfect now, but we have genuine concerns that if it's privatised there may be less visibility and more problems.
3.37
The sector argued that in order to remain competitive in the global education market, ‘Australia’s student visa framework must maintain clarity, transparency and consistency’. Universities Australia submitted that international ‘experiments’ in privatisation of visa processing had led to a ‘[n]egative experience for users and reputational risk for the sector’. As such, Universities Australia argued:
The best way to maintain integrity, efficiency and minimise cost and hardship to visa applicants is for Australian visa processing services to be retained within the immediate control of the Department of Home Affairs.
3.38
The Australian Hotels Association and Tourism Accommodation Australia submitted that any potential impacts on tourism and hospitality must be taken into account and minimised. Their combined submission highlighted potential threats to the integrity of the system, concerns around any possible price increases for visas, and concerns around flexibility and responsiveness.
Asylum seekers
3.39
The Refugee Advice and Casework Service argued that visas for people seeking asylum would never be appropriate for an outsourced system. Centre Director, Ms Sarah Dale, contended that ‘decisions involving protection matters are more nuanced and the clients have significantly different needs, having fled torture, trauma and other associated violence’. Ms Dale argued:
Decisions on protection visa applicants and material within those applications are quite literally matters of life and death. They are nuanced, complex and go beyond Australia's domestic interests, given the international implications and obligations under law.
3.40
Ms Dale said she lacked confidence in the government’s assurances that applications for protection would not be included among the types of visas to be processed via the outsourced system. Ms Dale explained:
…most people now arriving and seeking asylum in Australia have arrived on a different visa—they've arrived as a student or they've arrived as a tourist, and then they've put in applications for protection. Therefore their data is going to be held by this system.
3.41
The department provided on notice the list of visa types included in the original request for expression of interest. These were:
Special Category (New Zealand);
Temporary Resident (Other);
Temporary Resident (Skilled);
3.42
However, the CPSU submitted that the tender documents indicate the government ‘will retain the option to extend the scope of the Platform to citizenship in the future, and the Department has made clear that it is their preference to do so’.
UK experience
3.43
A number of witnesses pointed to recent experiences in the United Kingdom, where the visa processing system was outsourced to French tech company, Sopra Steria. The CPSU said:
In the UK, visa privatisation has resulted in price-gouging of visa applicants, vulnerable applicants being exploited, and private providers using long delays in processing to drive interest in a quicker, premium, higher-priced product. The very existence of a stream where applicants who can pay more get better services runs deeply counter to the community's expectations of how public services should be delivered.
3.44
MIA observed that, as a result of the privatisation, service quality was reduced while costs to consumers were higher. Mr Hourigan claimed that visa applicants are required to pay ‘premium prices’ to progress phone or email inquiries in relation to their applications. MIA was concerned that:
It could be expected that the winning Australian consortium would impose similar fees for service. The winning consortium is expected to provide value-added services on a shared-value basis, but will this come at the expense of program integrity or border security?
3.45
PSI referred to research that found costs to consumers have increased ‘between 14 and 72 per cent depending on the visa type, with optional services ranging from five to 1,000 pounds’. PSI contended that the ‘optional services’ represented ‘a clear example of profit focus over quality control’, as most of them were of no use to applicants. PSI’s Mr Michael Whaites explained:
Sopra Steria has significantly decreased the number of free sites for internal visa applications to just six core sites across the UK. To book a session, you need to log on and apply, with each day released at 7 am on that day and filling quickly, coupled with repeated website failures. The alternative is for applicants to travel to another site and pay between 60 and 200 pounds for the appointment.
3.46
Representatives from Australia’s university sector reported feedback from their UK counterparts that revealed ‘several persistent issues’, such as lengthy waiting times, problems of access, and fee-gouging behaviour for ‘fast-track appointments’. Ms Jackson said: ‘The ring-up support line charges are 2.50 pounds per minute. Some students are reported to have spent 100 to 200 pounds and still not received an appointment’.
3.47
Universities Australia was concerned that outsourcing may create a visa system ‘which is not equitable’. Ms Jackson reported on a briefing Universities Australia received on the new visa system from the then Department of Immigration and Border Protection, which ‘raised the prospect of differentiated services, including premium options that would assist in achieving financial outcomes for the government’.
3.48
PSI stated: ‘The system in the UK is increasingly favouring those who can afford the added costs, diminishing the human rights of other applicants’.
The tender process
3.49
Concerns were raised in relation to the tender process, including by the CPSU, which highlighted the limited nature of the tender and raised ‘concerns about the adequacy of competition’. Ms Donnelly said:
The design of the procurement process is opaque, with the Commonwealth not tendering for a known tech solution but for a bidder to develop emerging technologies. Both bidders have extensive links to government, which raises issues about public perception and public confidence.
3.50
The department acknowledged that the current tender is a limited tender. However, it explained that the process started as a broad call-out to the market in 2017. The first request for expressions of interest attracted ‘roughly 16 respondees [sic]’. Then the department worked with respondents to refine its requirements and ‘short-listed down from there to the two that received the formal [Request for Tender]’.
3.51
The CPSU argued that this process had ‘locked out’ other providers, including a number of Australian small and medium enterprises (SMEs), who may have been able to provide solutions. The CPSU described the tender process as ‘opaque’ and said Australian SMEs ‘can't find a way in’.
3.52
The two bidders in the final tender process are consortia. The first, Australia Visa Processing (known as AVP), is reportedly a conglomerate consisting of Ellerston Capital, PwC, Qantas Ventures, NAB, and Pacific Blue Capital. Some sources also list Oracle as a member of the AVP consortia. The second is an Australia Post and Accenture consortium.
3.53
Mr Jason Ward, Principal Analyst for the Centre for International Corporate Tax Accountability and Research (CICTAR), suggested that companies involved in these consortia ‘have pretty atrocious records of tax avoidance, both in Australia and globally’.
3.54
The committee asked CICTAR to provide a detailed analysis of companies involved in consortia, specifically Oracle and Accenture. CICTAR provided this analysis, as requested:
Globally, Oracle reported operating margins of 34% each year from 2016-2018 compared to Australian margins averaging 2.5% over 4 years (2013/14-2016/17). Globally, Accenture reporting operating margins of 14.8% and 13.3% in 2018 and 2017 compared to Australian margins averaging 8.1% over 4 years. While Accenture’s Australian margins are significantly higher, they have declined every year and were 4.9% in 2016/17. These significant and consistent gaps are a strong indication of profit shifting to reduce taxable income in Australia.
By total income (2016/17) in Australia, Oracle ($1.229 billion) ranked 271st and Accenture ($1.825 billion) ranked 176th in the ATO tax data for all large companies. In 2018, massive related party transactions of at least $773 million for Oracle and $1,061 million for Accenture may have facilitated the shifting of profits from Australia to tax havens.
Both companies are under audit by global tax authorities and have reached major settlements for transfer pricing. Oracle is currently disputing an additional assessment of over $300 million with the ATO. This transfer pricing dispute appears to be one of the ATO’s largest cases and may represent shifting of over $1 billion in profits out of Australia.
3.55
CICTAR’s contention was that ‘[n]o further federal contracts should be awarded to companies like Oracle and Accenture until they agree to stop using aggressive tax avoidance (transfer pricing) schemes and agree to increase transparency of Australian and global operations’.
3.56
The department stated that companies in the tender process have to meet strict criteria regarding their payment of tax. First Assistant Secretary, Mr Andrew Kefford reported:
There are provisions in the tender documents we publish which do seek additional information from the tenderers in relation to their tax compliance as well as the subsidiary or related parties…The tender requires a series of statements to be made in terms of the tenderer's tax behaviour and tax record going to compliance audit investigations…What the tender says is that we expect the providers to have an exemplary tax record with the ATO.
3.57
In response to a question on notice, the department also confirmed the following requirements tenderers must meet:
has complied with all obligations imposed on the Operator Group by any Tax Law;
has not in the last 5 years been the subject of any audit by, or in dispute with, any Tax Authority;
any contractors engaged by the Operator Group are not employees of the Operator Group for the purposes of any Law;
is not involved in any audit or investigation of any of its Tax returns or business operations or any dispute with any Tax Authority and the Operator Group is not aware of any circumstances or event which may give rise to any such audit, investigation or dispute;
has not entered into or been a party to any transaction which contravenes the anti–avoidance provisions, transfer pricing provisions or diverted profits tax provisions of any Tax Law;
is not currently the beneficiary of any extension of time within which to file, lodge or submit any Tax return or with respect to any Tax assessment or any Tax shortfall; and
has not in the last 5 years been the subject of any audit by, or in dispute with, any Tax Authority.
Risk, data and security
3.58
A key focus of evidence to the inquiry was around risks associated with outsourcing the visa processing system, including procurement risk, economic risk, data security and threats to national security.
Procurement risk
3.59
Mr Rizvi raised questions about the arrangements the department has in place to respond to possible problems with the procurement, such as: the private provider underestimating the cost of developing ‘such a complex ICT platform’; or the private provider choosing ‘a cheap form of rebuild’, which has to be re-done. Mr Rizvi added: ‘Is the department prepared to bail out the private provider with additional funds or allow more time for a proper build?’
3.60
PSI raised market risks, such as the risk that the companies involved may ‘fold, merge and sell’. It referred to a New South Wales example, where a hospital was privatised to a company that had been vetted and approved, ‘but that company very quickly sold on to a third entity’.
3.61
It was Mr Rizvi’s view that the ‘capability’ in the system should be ‘duplicated’ within the department. Without this duplication, Mr Rivzi suggested it would not be possible for the Commonwealth to terminate the contract if things went wrong. Mr Rizvi said:
I can't see, without a backup system, how it could terminate the contract. It's like saying, 'Turn off the visa system for a few years'—it's just implausible.
CHAIR: That raises the issue, does it not, about what the actual real cost is?
Mr Rizvi: Absolutely. The real cost in this, I believe, is ultimately a loss of control in the visa system.
3.62
The department argued that procurement risk has been mitigated by ensuring that the process is ‘business led’, rather than product-led. MIA, however, was concerned about ‘a distinct lack of oversight’ regarding the future operations of the consortium, and asked:
What will prevent the consortium from outsourcing the program to a third party in a lower cost jurisdiction where information may not be safely protected? What will prevent the misuse of the data for commercial or nefarious means?
Data security
3.63
Submitters were also concerned about privacy and data security.
3.64
CICTAR suggested that, in a privatised model there are no guarantees ‘records won't be processed by a company using workers overseas’. Mr Ward questioned how the government could control access to visa applicant information held by private companies, and reflected upon the lack of transparency in relation to the contracts for the new system.
3.65
The CPSU argued that there are a number of examples of outsourcing projects that were covered by ‘very comprehensive contracts…assurances and security mechanisms’, which ‘still resulted in major and damaging data breaches’.
3.66
The Migration Council raised a further issue around ‘the predictive capacity of the metadata’ held within Australia’s visa processing system. The Council felt that this metadata could have ‘a huge commercial value’, placing it at risk if not in government hands.
3.67
The department sought to assuage concerns, saying the successful tenderer will have to store all data onshore in Australia and meet Australia’s security, privacy and confidentiality laws. Under the model proposed, the department would retain ‘full access to the system’, and the data would remain in the control and ownership of the Commonwealth.
Access to information for applicants
3.68
Visa applicants frequently request access to their own information from the department, especially applicants who have changed from one migration agent to another and may not have their documents. MIA was concerned that the consortium would not be subject to the freedom of information (FOI) regime, and ‘would charge a fee for access’.
3.69
The Refugee Advice and Casework Service echoed these concerns and added that the FOI unit in the department is already struggling to meet the demand for access to documents and information, and that it fears even greater delays and expense for applicants if a private contractor was part of the process.
Job losses
3.70
The CPSU estimated ‘at least 2,000 direct public sector jobs could be lost’ as a result of the outsourcing process. The department disputed this suggestion.
3.71
Deputy National President of the CPSU, Ms Lisa Newman, said:
The reality is our members and delegates and the department estimate that could be between 2,300 jobs and 3,000 jobs lost over time as the tranches of the government's proposal to privatise…Over the next four to five years.
3.72
The CPSU said its estimates were drawn from analysis of the numbers of staff currently involved in processing visa applications, and associated activities. Ms Newman said this included 250 staff in Queensland, 800 in New South Wales, 500 in the ACT, 600 in Victoria, 100 in Hobart and Tasmania, 250 in Adelaide and 250 in Perth.
3.73
The CPSU argued that these staff may not be able to be redeployed, as there are no pathways for moving to ‘more complex and highly classified jobs’. Ms Newman said union delegates could find ‘no evidence…of any transitional arrangements’, and that it would be difficult to transfer people engaged in APS3 and 4 work to more complicated APS5 and 6 roles.
3.74
SA Unions highlighted the effect such a reduction in staffing would have on that state, saying: ‘The proposal to privatise Australia's visa processing system puts in excess of another 200 jobs at risk in South Australia.’
3.75
The CPSU in Tasmania said the privatisation of visa processing would have a ‘disproportionate impact on Tasmania’, because:
There are currently 136 staff working in the Department of Home Affairs in Tasmania and the CPSU understands that 90 percent of these staff work in visa assessments. Temporary work visas and tourist visa assessments, under scope for privatisation, are all actioned in Tasmania. The high amount of staff working in visa assessment, places those jobs at risk if the visa processing system is privatised. The visa categories first in scope for privatisation are processed in Tasmania.
3.76
Ms Newman also said that the department’s budget papers ‘indicate an 8.5 per cent decrease in salary entitlements in the forward estimates’.
3.77
This point was also picked up by MIA, which stated that budget papers indicate about ‘2,500 jobs [would] go as part of the privatisation model’. MIA’s Ms Bronwyn Markey directed the committee to the Department of Home Affairs Portfolio Budget Statement 2019-20, saying the section on forward estimates shows a 150 million reduction in staffing costs that remains low ‘until at least 2022-23’.
3.78
MIA further argued that the loss of visa processing staff was about more than just job losses. Mr Hourigan said:
In winding down the operations of the department, its DNA, long-term deep expertise and core understanding of the migration system will be lost and will be difficult to rebuild if this proposed privatisation system fails.
3.79
The department, however, disputed MIS’s interpretation of the figures. Ms Golightly said:
My understanding is that that figure has been confused. Indeed, the employee benefits budget from last year to this year has increased, as has the average staffing level. Perhaps what that figure might be referring to is the normal thing that happens over the forward estimates where various budget measures lapse and various estimates variations are made. But there is nothing in the forward estimates relating to the new platform because we are still doing the evaluation. I think it may well have been a mix-up in the figures, but it's certainly incorrect to say that there's a decrease of $150 million this year in the [global digital platform].
3.80
Asked to explain further, Ms Golightly added: ‘I need to be very clear that it's incorrect that a $150 million decrease in the employee budget is anything to do with the global digital platform’.
3.81
The department was asked to provide on notice a breakdown explaining the apparent reduction in employee-related expenses over the forward estimates. The department provided its response in December 2019, which stated:
Expense estimates for measures and variations are notionally allocated between supplier and employee expenses in the forward years based on costing agreements and historical splits.
As we approach each budget year, decisions are formalised as to how the budget will be allocated internally between employee and supplier expenditure. These estimates are subsequently updated.
Additionally, the forward estimates will be further updated based on the decisions taken by the Government in future budget rounds.
…
The key contributors to the overall reduction in total expenses include savings over a number of budgets from the 2014-15 PBS through to the 2019-20 PBS, in the following areas – Customs Reform, Smaller Government – consolidation of Australia’s border protection services, Better Targeting Skilled Visas, Reforming the Visa and Migration Framework, Resolving the Onshore Illegal Maritime Arrival Legacy Caseload, Establishment of Home Affairs Portfolio Efficiencies, Operation Sovereign Borders and a number of Estimates Variations.
Transparency
3.82
Stakeholders were critical of the government’s approach to the tender, saying there was not enough transparency around how decisions were being made.
3.83
The CPSU suggested the public had a right to know more about the project, and argued that the business case should be made public. Ms Golightly confirmed that a business case was prepared for the project, but is ‘part of the cabinet considerations’, and as such is not publicly available.
3.84
Asked about the costs of the project, Ms Golightly reported that the department could not provide an estimate at this stage, ‘because we haven't tested the market yet’. However, Ms Golightly did confirm the department’s view that the ‘scale of this project…is in the order of $1 billion to $2 billion’ for the first ‘bundle’.
3.85
The department noted that the Prime Minister and immigration minister have recused themselves from the tender process due to possible conflicts of interest.
Progress of the tender
3.86
As at February 2020, no decision has been announced in relation to the tender.
3.87
Media reports suggest that the department believes legislation would be required in order to outsource the visa processing system. This information is drawn from briefing documents prepared for the government by the department shortly after the May 2019 election.
3.88
Shadow Minister Assisting for Immigration and Citizenship, Mr Andrew Giles MP, in a media release on 29 January 2020, stated:
The Morrison Government has hit a roadblock in its plan to privatise Australia’s visa system.
The Department of Home Affairs’ own advice is that this privatisation requires legislative change.
The Senate has voted time and time again against selling off our visa system. Labor along with the crossbench strongly opposes the privatisation of Australia’s visa system.
It is highly unlikely the Government will have the support of the Senate meaning visa privatisation is set to be doomed.
3.89
Neither the Minister for Home Affairs, nor the department, has made any recent announcement in relation to the progress of the tender.
Committee view
3.90
The committee rejects the assertion that tendering for a private partner to host the global digital visa-processing platform is not privatisation. The global digital platform project would see a private entity design, build and administer the system that processes the vast majority of Australia’s visa applications. As such, the project would see the Department of Home Affairs hand over control of large amounts of sensitive and critical data to a profit-making conglomerate.
3.91
International experience, particularly in the UK, has shown that the consequences of such outsourcing can be dramatic. Profit-making entities are driven to find ways to maximise their profits, and this inevitably leads to reduced service quality and/or higher fees. The UK project has resulted in both.
3.92
The committee takes seriously concerns raised by the education, hospitality and tourism sectors that a reduction in the quality, timeliness, and affordability of visa services could severely impact their businesses.
3.93
Stakeholders have been understandably frustrated that the tender process has been so opaque, with no business case released, and no explanation offered for why the department cannot invest in an in-house solution.
3.94
The committee acknowledges that there is ambiguity around precisely how many permanent APS jobs may be lost as a result of any privatisation. However, the committee does not accept the department’s assertion that the project will not impact jobs. Regional communities in particular are likely to be affected disproportionately if the project goes ahead.
3.95
Outsourcing Australia’s visa processing system is a project fraught with risks, and the committee is not satisfied that these risks have been sufficiently addressed. The committee has concerns around procurement risk, data security, and equitable access to data and information for potentially vulnerable cohorts. The committee is also concerned about the lack of transparency around the tender process.
3.96
For these reasons, and the fact that any decision to outsource would be extremely difficult to reverse, the committee cannot support the project. The committee suggests the department fund and further explore options for developing an in-house solution that does not require the government to ostensibly ‘hand over’ control of the processing functionality and data management to private entities.
3.97
The committee recommends that the Australian government does not proceed with the Request for Tender (RFT) Delivering Visa Services for Australia - Global Digital Platform, and seeks instead to fund and deliver an in-house solution.
Senator the Hon Kim Carr
Chair