‘Utterly unacceptable’: $1b annual spend on consultants undermining APS

Joseph Brookes
Senior Reporter

There are fresh calls to reign in the growing and “excessive” use of consultants by the public service, after evidence the Coalition government is currently on pace to spend more on external advice than the record $1.2 billion it previously gave a handful of consultancy companies in a single year.

The outsourcing of everything from labour hire to policy advice to a handful of global consultants like KPMG and Deloitte was scrutinised by a Labor-led Senate committee over the last year as part of a review of the capability of the Australian Public Service (APS).

“It is utterly unacceptable that the government paid close to $1.2 billion in one year to eight private consulting firms in an entirely unaccountable way, for work that arguably should have been completed in-house by the APS,” the committee said in its final report.

The federal government is reportedly on track to pass the $1.2 billion, which was recorded in 2018/19, now averaging more than $2 million a day since the financial year began.

It is unclear if the 2018/19 figure is indeed the peak because of what the committee found was a “lack of transparency and oversight on consultant expenditure”.

Independent experts, the public service union, think tanks and former top public servants testified to the Senate committee that the reliance on consultants was not new, a claim borne out by audit office analysis which shows consultancy contracts have trended way up since the Coalition came to power in 2013.

A graph included in the APS capability report showing the jump in consultancy use. [Source: Australian National Audit Office, Australian Government Procurement Contract Reporting, Information.
In its final report released last week, the committee said it is “deeply concerned at the excessive use of consultants within the APS and the relationship of dependence that has formed”.

Reliance on external advice is now at an “alarming level”, the committee concluded, far above comparable nations and undermining the capability of the APS.

“This preference for policy advice from private, for-profit firms that operate with an ethos vastly different to that characterised by the values of service, integrity and impartiality which define the APS, is alarming. The committee considers that this preference shows a flagrant disregard for the value of public policy, as well as the skills and capacity of the APS,” the committee said.

Solutions proposed by the review include more transparency and accountability in monitoring and reporting of the use of a consultants to be introduced as an “urgent priority”, and for an effective cap on how much agencies can spend on external consultants.

The federal government should also develop robust new engagement guidelines that prevent the use of consultants for works considered a “universal and enduring public service function”, and the establishment of an internal consultancy hub to provide-assistance to multiple agencies.

Victoria has already introduced the principles approach and should serve as a model for the federal level, the report recommended, while the internal consultancy hub should be modelled on the similar approach introduced in the UK after similar concerns.

An Australia APS consultancy hub should also be responsible for approving external consultancy contracts and for developing and monitoring agency level policy capability, the committee recommended.

When external consultancy contracts are required, they should include a “mandatory, enforceable provision requiring skill transfer back to APS employees”. Other recommendations in the review include scrapping the controversial average staffing level cap to help build APS capability and capacity.

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