Gravy train continues to flow for Australian consultants

31 October 2018 3 min. read

Whilst a change in leadership may lead to a change of government next year, the Australian consulting industry is – along with a number of other sectors – attempting to understand how they will fare in 2019’s Australia. One thing however is certain, the cash flow that stems from the government seems set to continue, at least until the election.

The chaos seen in Parliament House which led to the demise of Malcolm Turnbull’s government may also be the ultimate downfall of the Liberal Party themselves. In the post-August environment, the private sector are scrambling to comprehend the new government’s agenda and their chances of coming out on top at the next election.

Over the weekend, the by-election in Wentworth showed Liberal Party voter sentiment is at an all time low. With Kerryn Phelps taking the former Liberal stronghold from the Coalition, Australia will now have a minority government. Akin to the days leading up to the general election held in 2013, there is likely to be a lot of talking and barely any doing.

As both parties bicker like an old married couple, the consulting industry will be busy preparing for the worst but hoping for the best. Labor’s pledge to build up the public sector again has led to a number of consulting firms ramping up political donations to both parties.

The ability to predict how the election will change the public sector’s reliance on the professional services industry will affect how certain players engage the government in 2019. Being in the good books with both parties is important to have a firm stance with government contracts in the future.

Gravy train continues to flow for Australian consultants

For an early indication, Matt Canavan’s decision to spend $70,000 of taxpayer money on Korn Ferry’s services in the hunt for a Chair of the North Australia Infrastructure Fund (Naif) shows that the cash cow will keep on giving.

Cash cow?

There are two main indicators that this is the case. Firstly, whilst outside council is not usually considered when appointing from within the government’s own ranks, the consulting firm was asked to consider the board in addition to others. Secondly, almost half of the salary for the position, which is $150,000 a year for the part-time position, was spent on the consulting firm’s search. For executive search firm’s like Korn Ferry in this case, the usual amount charged is 33% of the salary. 

“The work that Korn Ferry is, in my understanding, fairly typical in the circumstance,” said Canavan. “They provided a range of options for me and the government to consider in terms of people with the required expertise that met the criteria under the Northern Australia Infrastructure Facility Act… We considered those suggestions alongside the potential of an appointment from within the board of the Naif.”

“I did speak to all the directors on their views in regards to this matter, as well as consult with Korn Ferry on this report before making an informed decision,” he continued. “The purpose of the executive search was to identify additional suitable external candidates for the Naif board chair and Naif board members.” The firm will also help the government with a suitable replacement for the Chair of the ABC. 

Whilst this act may seem insignificant, it does present a view of the future under a consecutive Coalition government. For the Labor Party, perhaps it may be a case of building up the public service – firstly by lifting the cap installed by the Liberal Party on public service workers – indirectly effecting the number of consulting contracts released. Either way, until the election it is clear that the Australian Government is willing to continue its reliance on consultants.

Related: Australia’s management consulting market set to expand in 2018.