Think-tank calls for government consulting reports to be made public

17 October 2021 Consultancy.com.au 3 min. read

The government’s $1 billion bill from Australia’s biggest consultancies could pay for thousands of public service jobs, says the Australia Institute, with calls for reports to be made public.

The Australia Institute has called for all Federal Government consulting reports to be publicly tabled in Parliament, with analysis from the public policy think-tank concluding that the over $1 billion-plus annual spend on (large) consulting firms in Australia could cover more than 12,000 public service jobs. It comes as the national audit office has also raised serious concerns about labour outsourcing at Services Australia.

Federal consulting spend on the largest firms – the Big Four together with McKinsey, BCG and Accenture has close to tripled since the Coalition came to power in 2013, creating the fourth largest advisory market in the world and the highest outlay by per capita by some margin. Yet, the public are commonly kept in the dark as to return on taxpayer money, highlighted by secrecy surrounding a recent $2 million McKinsey contract.

Federal government spending on the Big 7 consulting firms

To significantly enhance transparency around consultancy procurement and results – “to the maximum extent possible” – the Australia Institute proposes the Senate issue a “continuing order for the production of documents”, which would require all requests for tender and all reports and written advice provided by consultancies to be made public. The Senate has a number of such existing orders in place, including in relation to procurement.

“It is worth reflecting on the rise of consultancy spending by the federal government, now exceeding $1 billion a year,” said Australia Institute’s Bill Browne, a senior researcher with the think-tank’s Democracy & Accountability program. “Compelling the work done by consultancies to be public would be an improvement on the status quo, although there is still the underlying issue that consultancies are doing an unprecedented amount of public work.”

The secondary issue raised by Browne – the erosion of expertise within the public sector due to increased outsourcing – has also now come under an increased spotlight with the Australian National Audit Office earlier this month launching an investigation into the high level of contractors engaged by Services Australia, in particular with regards to its technology capacity.

Actual APS employment and equivalent in consultancy spend

The Australian National Audit Office will also look into contracting at the Department of Defence, which works extensively with close to a dozen of large consulting firms and many more boutiques.

Auditor-General, Grant Hehir, said the investigation will seek to determine what frameworks are in place for managing such a significant number of contractors, often engaged as “goods and services” through labour-hire companies. “There’s a pile of rules around the Australian Public Service workforce about expectations you have about how they go about doing their work in the public sector. When you’re contracting to bring in staff, do you put similar expectations around them?”

According to ABC figures cited by the Australia Institute, the total government spend on external staffing had doubled over the five years to 2020, and is now pushing the $5 billion mark annually – the equivalent of an additional 50,000 public service jobs. Browne concludes that while a continuing Senate order “would not resolve all problems with the spiralling reliance on consultancies, it would serve as a significant first step.”