The Albanese government came to office in 2022 having pledged to dramatically reduce the bureaucracy's dependence on external contractors and labour hire. It did so by creating an additional (nett) 28,000 to 30,000 new permanent positions.
While on paper the APS has grown from an estimated 144,000 in 2021-22 to 215,000 in 2025-26, much of that reflected a change in how people were employed rather than the creation of new roles with tens of thousands of people transitioning from the Coalition's previously invisible "shadow workforce".
In what appears to be a curious development, given this tectonic shift in the government's approach to recruitment and service delivery, departments are once again paying premium rates for hourly contractors in order to meet project deadlines according to HorizonOne's State of the Canberra Recruitment Market 2026 report.
This trend exposes a significant realignment of priorities within the public sector as economic pressures mount. Job security now dominates the mindset of many APS workers with the latest industry data showing they are much more heavily focused on career preservation and finances amid persistent cost-of-living pressures than was the case 12 to 18 months ago.
Previously challenging work and flexibility ranked most highly. Job security did not even feature in the top 10 worker priorities. This arguably reflects the fact that staff recognise a faltering economy could leave a Labor government with no choice but to cut jobs - just as the Gillard government did in 2012 and 2013.
Given economists warn the federal budget's wage forecasts don't add up unless thousands of roles are shed, the concerns are legitimate. While publicly the government rules out sweeping reductions, departments are under intense pressure to find internal savings and reprioritise spending.
The forward estimates project a falling public sector wage bill despite locked-in annual pay rises. That means lower headcounts are inevitable.
This has delivered a reality check which has brought public servants back into line with the private sector where job security, productivity and the budget bottom line are inextricably linked.
This changing landscape creates a fascinating dynamic with unions representing public sector employees continuing to pursue aggressive wage increases. Demanding a significantly higher rate of base pay in a climate where a per capita recession lingers and overall public sector job volumes are already tipped to fall seems courageous.
In the interim, departments and agencies work around staffing caps in the traditional way - using short-term contract engagements to bridge capability gaps.
The HorizonOne report found that many local public sector workers are demonstrating a highly risk-averse mentality by choosing to stay in their current positions rather than gambling on a career transition - even within the APS.
When career bureaucrats do dip their toe into the recruitment pond, it is often merely to test their market value. They are not committed to leaving unless a prospective employer offers an exceptional value proposition, including something akin to tenure.
The public service faces a precarious balancing act. If the broader economy continues to slow and the cost of living continues to rise, the government must execute difficult efficiency drives.
As a result, job security currently trumps almost everything else for Canberra's professional bureaucrats.
Analysts and workers alike are watching closely to see how these shifting employment patterns play out as economic headwinds force a fundamental rethink.
