ServicesAus win for McKinsey, KPMG

James Riley
Editorial Director

The government has called in the big consultanty firms McKinsey and KPMG to help design its new Services Australia department, with the companies sharing in nearly $1 million for the six-week project.

Both McKinsey and KPMG will provide advice and support to former NSW government Finance secretary Martin Hoffman, who is leading the six-week strategic design project as Services Australia Taskforce lead.

After the May election, Prime Minister Scott Morrison unveiled Services Australia as a new department that would drive service delivery and public service ICT. The subsequent Administrative Arrangement Orders showed that this would be built on a re-badged Department of Human Services.

Martin Hoffman: Working with KPMG and McKinsey on the government strategy

Government Services Minister Stuart Robert said last month that a taskforce had been established to develop a strategic plan for the “substantial reform program”, with Martin Hoffman at the helm.

Mr Morrison wants Services Australia to follow in the footsteps of the highly successful Service NSW, which was set up as an independent delivery agency eight years ago.

The federal government has also called on the services of McKinsey and KPMG to guide the transition to Services Australia, with the two companies sharing in $858,000 for the six-week job.

A Department of Human Services spokesperson confirmed to that the two firms would assist on the project.

“McKinsey and KPMG have been engaged to provide strategic advice to the Services Australia Taskforce that has been established to develop the strategic plan for Services Australia. Martin Hoffman is leading the Services Australia Taskforce,” the spokesperson told

“The engagement of these firms was through a Commonwealth Business Advisory Panel, which was established through an open approach to the market.”

The department confirmed that the maximum value of the contract over six weeks with the two firms is $858,000.

The tender was awarded on 11 July but was online uploaded to AusTender on Monday of this week. The contract runs to 23 August, and only McKinsey is listed as a supplier. McKinsey is the lead on the project but is working with KPMG on the strategy.

Services Australia is meant to be replicating the successful Service NSW model.

“Services Australia will pick up its lead from a similar organisation established by the NSW government called Service NSW, which I think has been a very important reform in NSW and made dealing with government much easier,” Mr Morrison said earlier this year.

“It’s also about driving better use of information technology and apps that can assist Australians to better access services they need.”

Mr Robert said the new department would “bring in a new era in customer service, focused on the needs and expectations of all Australians dealing with government” by providing “simple and seamless interaction”.

“Over the next six weeks, Mr Hoffman and his team will develop a comprehensive strategic plan to deliver on our commitment to service delivery reform for the benefit of all Australians,” Mr Robert said.

Mr Hoffman is contracted directly with the Department of Human Services.

The Digital Transformation Agency’s role in the transition to Services Australia, or in the development of a government service strategy is not clear. The DTA would remain an independent agency under the new department, with its own staffing, accountability and reporting but would now report to Mr Robert, rather than through Prime Minister and Cabinet.

McKinsey was also awarded a separate $5.9 million, three year contract with the Department of Human Services in mid-June for “business advisory services” of “skills currently unavailable within agency”, but the department said this is not related to Services Australia.

The revelations come as advisory firms are set to face the scrutiny of two new parliamentary inquiries that were established last week.

On Thursday the Senate voted to launch an inquiry into the government’s $50 billion in government services outsourcing, with a focus on the privatisation of major programs and consultancy contracts.

The Legal and Constitutional Affairs References Committee has been tasked with reporting on the Coalition’s use of private sector resources by mid-October.

A separate inquiry has also been launched into competition and conflicts of interest between the big four accounting auditing firms – PwC, KPMG, Deloitte and EY – and the performance of regulators.

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