By Paul Hemsley and Julian Bajkowski

The New South Wales government is planning to outsource the state’s $900 million a year road maintenance operations in a move that will send around 500 public sector jobs to private contractors.

The government has confirmed that the Roads and Maritime Service (RMS) of NSW is now finalising  the business case for the big shift before the plan is formally put to Cabinet.

The creation of a business case from RMS follows a recommendation from the NSW Commission of Audit that the bureaucracy develop a proposal to conduct a competitive tender for road maintenance in the Sydney area.

The move to send the work to the private sector is the latest in a string of agency shake-ups that Premier Barry O’Farrell hopes will increase productivity and value for money by subjecting government services to competitive market forces.

The privatisation of the operation of the state’s ferries in 2012, which had been the subject of a number of critical reviews, was the first major privatisation.

The previous Labor government had also unsuccessfully attempted to get private industry to run Sydney’s ferries which, although iconic, have proven an expensive to run and essentially service commuters from the city’s highly affluent waterside suburbs.

Unions, which stand to lose members through the government privatisations, immediately slammed the plan to send road jobs to the private sector after the RMS notified staff and  industrial officials of the initiative.

Australian Workers Union NSW State Secretary, Russ Collison, said the RMS should “go back to the drawing board” and review its outsourcing recommendation “given the failed privatisations” in other Australian states and across the world.

“The biggest losers of this recommendation will be motorists and the taxpayers of NSW,” Mr Collison said.

Mr Collison said road workers were devastated when they heard the news that their jobs could be outsourced as some “have given a lifetime’s service.

“The government is on dangerous ground. It can't outsource its responsibility to ensure the road network functions properly,” Mr Collison said.

He said these road workers provide “valuable services that contractors simply can’t provide or will deliver at inferior quality at a greater cost”.

According to the NSW government, however, staff members were informed that any new service provider will be required to offer employment to staff and provide a transfer package to those who accept the offer.

NSW Minister for Finance and Services Greg Pearce’s plan to allow easier prequalification registration for contractors has coincided with the announced road privatisation.

Mr Pearce’s supplier pre-qualification scheme is meant to make it easier for non-permanent contract workforce be hired by NSW government agencies.