Govt bypassed CSIRO to give $6m net-zero contract to McKinsey

Denham Sadler
Senior Reporter

The federal government bypassed the national science agency in outsourcing key modelling work for its net-zero plan to the US-based multinational consulting McKinsey at a cost of more than $6 million.

It was revealed at Senate Estimates last week that CSIRO had applied for a tender to conduct modelling work in relation to the Coalition’s net-zero plan, but was rejected. The government instead awarded contracts to McKinsey worth more than $6 million for this work, which featured heavily in its technology-driven plan, released last week.

CSIRO executive director of environment, energy and resources Dr Peter Mayfield confirmed at a Senate Estimates hearing on Thursday that the science agency had applied for this work but was unsuccessful.

Bypassed: The Industry department went to McKinsey rather than governments own science agency

“For the most recent plan that has been announced, there was a tender process. CSIRO participated in that process but we weren’t successful,” Dr Mayfield said.

“CSIRO tenders for many pieces of work across our whole portfolio, so this is a normal process. Sometimes we’re the successful tenderer and sometimes we’re not.”

When pushed by Labor senator Jess Walsh, Dr Mayfield said he had “great confidence” in CSIRO’s ability to provide advice and modelling on these issues.

Senator Walsh questioned the government’s process behind the net-zero modelling.

“It seems like a strange process – that the government would put out to tender something it has the capacity to do in one of its agencies and make you bid for it and then have that work done by somebody else at a cost of several million dollars,” Senator Walsh said.

The government paid McKinsey more than $6 million across this year to provide key modelling work for its tech-driven net-zero plan, which was unveiled by Prime Minister Scott Morrison last week.

The plan featured “analysis” by McKinsey along with the Industry department, with Treasury providing little input into the economic modelling.

McKinsey was first awarded a $4.86 million contract earlier this year from February to June to take the stretch goals from the government’s technology roadmap and look at how to achieve them, as well as the economic impact of this.

The firm was then awarded a further $1.2 million contract to conduct “bottom up” analysis of how abatement would occur across different sectors and to compare this to the department’s own analysis.

The modelling completed by McKinsey has not yet been released publicly by the government.

“The modelling we commissioned from McKinsey was undertaken over a series of points in time over the year, some of it was commissioned early on,” Industry department deputy secretary Jo Evans told an Estimates hearing last week.

“As we proceeded to do the general equilibrium modelling we also asked McKinsey to do some bottom up work using that earlier analysis to tell us what they would’ve come up with using similar assumptions. That was done closer to the end.”

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