The Federal Labor party vows to cut down on consulting spend

12 August 2018

In another episode of the clash between public service and private business in Australia, the Labor party has said that it would rein in the use of consultants and contractors and give projects to public servants where possible, if it wins the next election. 

There has been a lot of talk in Australia recently of the overspending on private contractors and consultants to fulfil the government’s objectives. One of the objectives of the most recent Liberal government, originally spearheaded by Tony Abbott, was to cut public spending and cap public service jobs. 

As a result of these policies, the government has successfully shed 15,000 jobs from the public service and in turn more than doubled its private sector spend. This may seem like a win to some and a loss to others, depending on what side of the political spectrum you stand, but it is in line with the policy with which the Liberal Government won the election.

“The use of contractors where appropriate is an efficient way to keep the overall cost of government administration low when the business need to access relevant skills and expertise is temporary or the expertise and skills are more efficiently obtained and maintained in the private sector,” said Finance Minister Mathias Cormann.

Finance Minister Mathias Cormann and Shadow Finance Minister Jim Chalmers

“The overall cost of government administration continues to fall as a proportion of overall government expenditure, which itself is also growing more slowly than it has in the past. It has fallen from a high of 8.5 per cent in 2007/08 to 7.1 per cent in 2015/16, and is projected to fall to just 5.6 per cent by 2020/21,” Cormann said.

Cormann went on to claim that the only way to judge the efficiency of public services is to look at the pay-check to the Australian taxpayer. However, efficiency is a measurable concept beyond money. The services which the government either chooses to provide or outsources can be judged through the same lens which includes cost-benefit, progress, output, productivity, etc. 

The question of efficiency will always exist whether the administration is done by the public or the private service. It is this kind of language with a successful spin on it from the Labor party that has created an election issue around contractor spending. 

Cormann says that, “The government has been appropriating between external consultants and permanent experts within government agencies, as appropriate to different projects. There has been no prejudice in these choices.”

The Labor party argues that this is inherently untrue, as the public service cuts have made that decision for the government. The less money, the less able the government to attract quality talent and compete with the private sector. This is the basis of the shadow finance minister Jim Chalmers’ argument; an enforced average staff level cap and funding cuts has forced the government to rely on contractors and consultants.

This is what Chalmers will bring to the table at the recently initiated review of federal bureaucracy. The government is open to suggestions regarding the public service in any regard in the most wide-ranging reviews since the 1970s. This comes off the basis of technological change and global public policy changed.

“It’s not a radical idea to say that public service work should predominantly be done, where possible, by public servants.”

As it stands, Australia is far behind Europe in regards to its use of e-government services – think the postal vote on legalising gay marriage in comparison to Estonia’s totally digital government – and has been paying consulting firms to bring them up to speed. A recent example of this is the contract tender to digitalise Australia’s visa application system – which also had the Labor party up in arms. 

In its current form, the government’s public services could not compete with a consulting firm in terms of digital architecture or IT strategy. Chalmers sums it up nicely; “Blind adherence to an arbitrary cap hasn’t just compromised services and advice. The average staffing level (ASL) cap is now a perverse incentive for more spending on external providers.”

“There’s no point hitting an arbitrary short-term headcount target if it just means building higher consultancy costs into the budget in the future,” he continues. “It’s not a radical idea to say that public service work should predominantly be done, where possible, by public servants.”

This question is now the part of the hustle that will fundamentally divide the two parties and the answer is a matter of opinion. Are private companies better at implementing public policy than public servants themselves? This is a contentious issue and the consulting industry as a whole is not too preoccupied by the answer. 

The big consulting firms know that they have a global network stretching to almost a million brains combined and can draw on any of this expertise if they please. The Australian government, whichever party is in charge, does not have the same option. So when it comes to competing with consulting firms, the Australian government must fundamentally change the way that it operates. It must innovate and create from within, as consulting firms have done.

Labor say that they will “save taxpayers hundreds of millions of dollars that would otherwise go to consultancy firms for work that public servants with expertise and experience can – and should – do.” If it comes to it, consulting firms will accept this and innovate themselves into a position that the government will need them again. It’s in their nature.


KPMG Law expands in Australia with launch of government practice

06 March 2019

KPMG Law has continued its recent push with the launch of a government-focused practice in Canberra, while adding another partner to its Sydney office.

The legal consulting arm of Big Four professional services firm KPMG has announced the launch of a national government practice to be based out of Canberra and led by recent recruit Philip Jones-Hope as director. Meanwhile, KPMG Law has also added TMT specialist Damien Bailey as a partner in its Sydney office, extending its partnership team to 20 across four Australian offices.

With record growth of 30 percent in 2018 and a declaration of intent to expand its current global headcount of approximately 2,300 legal professionals to 3,000 in the coming years, KPMG Law continues to build steam around the world – with Australia no exception; indeed, the country has served as one of the primary international testing grounds as the firm looks to tap into a lucrative global market.

Now, following the launch of a Legal Operations & Transformation Services offering last year, the Australian arm of KPMG Law has again expanded its suite of provisions with the establishment of a Canberra-based government practice. The new practice will be led by Philip Jones-Hope, who joined the firm last year and brings more than 25 years of private and public sector legal experience to the role.

KPMG Law expands in Australia with launch of government practice

A former senior solicitor (prosecutions and compliance) and principal adviser (Aeronautical Search and Rescue Policy/ Aviation & Operational Implementation) at government body the Australian Maritime Safety Authority, where he spent seven years, Jones-Hope is said to have extensive experience in the areas of government projects, commercial advisory, and legislative and regulatory reform.

Further to the launch of the government-focused practice, KPMG Law has also added technology, media and communications specialist Damien Bailey as a partner in Sydney, with financial services and markets regulation expert Zein El Hassan having joined as a partner in Sydney earlier this year. The firm has also recruited technology lawyer Alex Lundie as a director, who is reported to be joining in the coming months.

Lundie, who specialises large-scale technology procurements, will cross after more than four and a half years with law practice Clayton Utz, having earlier spent a similar-length of time as legal counsel for tech consultancy Infosys in the UK. Bailey, meanwhile, joins via Herbert Smith Freehills, with nearly 25 years of professional experience and earlier periods at Minter Ellison and Simmons & Simmons – the latter where he led the Asia technology practice.

“Zein, Damien, Alex and Philip are all talented individuals with deep industry expertise and top tier experience. They bolster KPMG’s integrated offering and enable us to provide the widest possible lens of insight and expertise to our clients,” said Stuart Fuller, Head of KPMG Law for the Asia Pacific. “These appointments reflect our clear strategic focus on growth in the key, rapidly changing and inter-connected areas of financial services regulation and reform, data, digital and technology and government.”

Earlier this year, KPMG further expanded its legal services offering in the hotly contested Asian market – the launch in Hong Kong through SF Lawyers marking its 76th jurisdiction worldwide, with the promise of Shanghai to follow. The Big Four firm is also shortly set to establish its legal consulting arm in the UK, and recently poached a team of 145 lawyers from a single competitor and former collaborator (Fidal) for its French branch, including 26 partners.

Related: Big Four accounting and consulting firms booming in Australia.