Government keeps quiet on in-house advisory as political debate brews

The federal government has extended funding in its latest budget to fledgling in-house advisory unit Australian Government Consulting, but refuses to reveal how much has been committed.

Scheduled for the 3rd of May, the 2025 Australian federal election is once again shaping up to be an ideological battle over Australian Public Service (APS) size and capabilities and outsourced consulting and contractors, a tediously consistent theme dating back for more than a decade (actually, more like at least seven, going back to Menzies).

In the build-up to the last election, Labor pledged to slash $3 billion from the government’s consultancy and outsourcing bill – the former which had ballooned to record levels over the course of the Liberal Party’s almost one decade in office – and rebuild the APS, and has mostly followed through on its promise since regaining power in 2022.

Yet, likely emboldened by last year’s surprise US election results and the-then proposed Department of Government Efficiency (DOGE), the Liberal opposition has now gone all in, vowing to axe more than 40,000 public sector jobs in Canberra should it win the election, or roughly the same number added nationally during Labour’s four years in office.

Given the relative size of Australia’s population and number of its public servants (projected at almost 215,000 next year), it’s a somewhat risky position, which the opposition is attempting to offset in its political messaging by specifically targeting those ‘bureaucrats in Canberra’ – you know, Australia’s seat of federal government.

With the opposition hinting at sizeable cuts in critical community services in areas such as health, education, social welfare, and veteran’s support, it’s a debate Labor probably thinks it can win – and perhaps why it’s now being so coy on some of its own cost-cutting measures to delimit any potential lines of attack, including as to the in-house government advisory it set up 2023.

Australian Government Consulting

Led by former McKinsey & Company engagement manager Andrew Nipe, Australian Government Consulting – or AGC – was established with an initial two-year budget of $11 million, but was recently revealed to have saved a total of just $3.6 million on external spending across 15 projects since its inception: easy ammunition for opponents wanting to point to a grand waste of taxpayer dollars.

Despite that being a highly simplistic viewpoint, the government has since suddenly grown a bit shy on the project, extending AGC’s funding for a further twelve months in its latest annual budget but otherwise bizarrely refusing to reveal the sum committed, with the figure marked as ‘not-for-publication’ in the publicly-released annual budget papers.

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“The introduction of AGC was an important step in bringing core functions back into the APS, and it should play a key role in reducing the amount of outsourcing to private consulting firms,” Greens senator Barbara Pocock said in response. “The fact that details of its budget allocation are being hidden is a worrying development, as transparency in government is key to winning the confidence of stakeholders and the public.”

Trimming costs

The Greens have also been hitting Labor hard from the left over the government’s headline cost savings, accusing it of obscuring the finer details of the consulting cut-down by consistently conflating the amounts spent on consultants and external contractors. The party is calling for an annual minimum 15 percent reduction across all departments and agencies over the next five years.

“This tactic of hiding the actual amount being spent on consultants means that we have no way of knowing whether the government is actually spending less on consultants or not. In fact, it could be the case that it’s on track to spend the same amount as last year,” Pocock said. “We need a more transparent breakdown of the spending data before we can have confidence in Labor’s claims.”

There is indeed some evidence that a fair chunk of the former outlay has simply shifted from Australia’s biggest multinational consulting firms to smaller boutiques such as Canberra-based Sententia, while there has been a notable scramble over the past year or so among mid-tier challengers such as Oliver Wyman and BDO to now set up shop in the nation’s capital.

Also notable, while they may have recently cut back on political donations, a few of the biggest losers in the government’s shift in its consultancy procurement approach have since taken to sounding the ‘alarm bells’ on the state of the Australian economy, with the simple point being that they will almost certainly also be the greatest beneficiaries of a Liberal return to power and its policy to once again downsize the APS.

In this respect, an odd ideological rift has opened up on the political-right between the US and Australia. While the current US administration is most definitely taking a carving knife to its federal departments, it has also been targeting the consulting sector, with global giants such as Deloitte, Booz Allen, and Accenture recently put on notice and the latter already feeling the pinch.

A rethink of matters

How the upcoming Australian election will pan out and its consequences for the APS and local consulting industry is still basically anyone’s guess, but most agree that the government should at least be a little bit smarter in the way it approaches consulting, with many of those with a direct stake (and some of us on the sidelines) hoping for at least a more sensible stance over an ideological one.

In a recent conversation with local Australian public service-focused publication The Mandarin, James Twaddle, the former Strategy& leader who last year crossed to head up Oliver Wyman’s newly-established government & public institutions practice in Canberra, had this to say: “One thing is certain: the search for greater government efficiency will be a live issue in 2025.”

“There’s now this much more radical way of thinking about what the government should actually be doing,” Twaddle says, noting that the growth in the APS will inevitably lead to inefficiencies, while asking; “How do we take the public sector as it is and deliver better outcomes for our citizens?”