Covid drives up Victorian government consulting spend by a third

23 January 2022 Consultancy.com.au 3 min. read
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The Covid-19 public health crisis has contributed to driving up the Victorian government’s spend on external management consultants by a third in just one year.

The Victorian state government’s consulting spend has hit at least $175 million for its past financial year, according to analysis of department records. While the federal Liberal government is frequently criticised for its excessive consulting outlay, the Labor-led Victorian government has also seen its public service consulting bill balloon by close to 300 percent since taking office in 2014, with a near $45 million jump over the last period alone.

As is the case at federal level however, much of the recent increase has been related to the economic and public health response to Covid-19, with the Victorian Department of Health and Human Services (now split into the Department of Health and Department of Families and Housing) being both the largest consultancy buyer at close to $48 million as well as registering the second-largest increase in spending, up by around 60 percent on 2019-20 figures.

Victoria government spending on consultants

Aside from the Department of Health and a 480+ percent hike in Department of Justice spending, from $2 million to $11 million, the other largest increases were seen at the and Department of Jobs and Department of Transport, up by 57 percent and 44 percent respectively to around $36 million each. Somewhat surprisingly, with the amount of activity going on, the Department of Premier & Cabinet saw a 62 percent decrease, down to $5 million.

As for the primary beneficiaries, the data is far less surprising, with the Big Four dominating – much the same as federally, and at an amount greater than recent NSW government outlays. Here, KPMG led the pack, pulling in close to $37 million from state coffers, followed by Ernst & Young and PwC at $25 million and $23 million, and Deloitte with $13 million. Management consultancy Nous Group was also paid $4.5 million for its work with the Victorian government.

Spending by consulting firm

Again, it’s worth noting that over half of KPMG public sector client revenues derived from its work with the Department of Health, adding up to almost $20 million, with much of that on pandemic response measures and related advisory. Some of its largest engagements were for ‘Covid-19 emergency management support’, and advisory on ‘Covid-19 and the private health sector’, the latter which brought in upwards of $6.5 million.

Speaking with the Age, a spokesperson from the health department said the record consultancy spend had played a vital role in contending with the impacts of Covid-19, but expected its reliance on external consultants to diminish during the recovery phase. “We’re doing everything we can to keep Victorians safe, which has meant adapting how we run services and establishing new systems to deal with the unique challenges of a pandemic,” the spokesperson stated.