Government spend on management consultants balloons as giant accountancy firms cash in
By political reporter Henry Belot
Posted about an hour agoFri 29 Dec 2017, 9:33am
The Federal Government has defended the increasing use of management consultants in the public service, amid concerns years of job cuts have stripped the bureaucracy of specialists.
Key points:
- The spend on consultants in 2016-17 was $300 million more than it was in 2012-13
- ANU professor says there are not enough skilled economists left in the public service
- It was previously revealed the Government spends as much on IT as it does on Newstart
A Government audit has revealed the cost of paying consultants for work public servants cannot do increased from $200 million in 2012-13, to $500 million last financial year.
The amount paid to consultants is now inching close to $700 million a year, which is an increase on around $380 million spent in 2013, when the size of the bureaucracy peaked at 167,000 jobs under Labor.
The big four accounting firms — KPMG, PriceWaterhouseCoopers, Ernst & Young, Deloitte — have won close to half-a-billion dollars in consultancy work over four years.
'Woeful lack of ability and knowledge'
Leo Dobes, a retired senior public servant and associate professor at the Australian National University, says there are not enough skilled economists left in the public service.
"There's a woeful lack of ability and knowledge in that area," Professor Dobes told the ABC.
"If you don't have specialised skills and you use a consultant, how can you know you're getting value for money?"
Finance Minister Mathias Cormann said the total cost of Government administration — including consultants and contractors — had fallen significantly under the Coalition.
Senator Cormann said when used appropriately, consultants could slash recurrent costs, improve efficiency and ensure the public service remained flexible.
"It helps to keep the cost of Commonwealth administration low by helping to avoid the ongoing costs which would be incurred with the recruitment of additional permanent public servants when the need for specialist skills or additional support is temporary or project-specific," he said.
Shadow finance minister Jim Chalmers renewed Labor's election pledge to limit the use of consultants in the public service, describing the spending as wasteful.
"The Turnbull Government's blunt public service headcount cap comes at the cost of building higher and rising consultancy and labour hire fees into the budget," Dr Chalmers said.
"This is a very worrying and expensive development which the Turnbull Government has gone to great lengths to hide, refusing even basic requests to learn more about the problem."
IT spend rivals cost of welfare program
The audit report comes after revelations the Federal Government is spending as much on information technology projects as it is on its major social welfare program, Newstart Allowance.
The cost of Government IT has spiralled from $5.9 billion in 2012-13 to nearly $10 billion, with 24 per cent of that going to Boeing, IBM and Telstra.
To save money and boost competition, the Federal Government has capped future IT contracts at $100 million, or three-year terms.
That would stop departments like Human Services signing a $484 million deal with IBM last year, extending an 11-year partnership that has cost more than $1 billion.
Dave R.
