Federal government excessively spent $580 million on consultants

05 February 2019 Consultancy.com.au

The Australian federal government excessively spent more than $580 million on hiring management consultants, according to an analysis from the Institute of Public Affairs. 

The analysis explored the direct cost of the federal government in excess of what is conceived as “regular and required operations” to society and business, also known as the cost of the political class, or swamp as America’s Donald Trump labelled it during his presidential election campaign. The report found that such spending stood at a total of $8.1 billion for the year 2017. The bulk was spent on public sector wage premiums, accounting for $5.5 billion, with the authors further finding that on average, public servants enjoyed average weekly earnings that were “significantly higher” than their peers in the private sector. In 2017, average weekly public sector earnings amounted to $,1410, compared to $1,117 for private sector workers.

Despite the difficulties of comparing pay elements including job roles and seniority across the public and private sectors, the authors highlight that public sector wage growth has been much higher in the two preceding years. “The government would have saved $1.24 billion a year if public servants received 9.5% superannuation instead of the standard 15.4%,” the report states.

Federal government spending: Direct cost of the political class ($ billion)A total of $439 million was spent on international organisations such as the International Monetary Fund and the World Bank, major political parties received $63 million in funding for their political campaigns, while advocacy organsiations such as health, diversity and social welfare groups received $191 million. Among the largest beneficiaries of the latter group are the Cancer Council, which received $39 million, Oxfam ($19.1 million), Australian and State Councils of Social Services ($14 million), AIDS Council of NSW ($13.4 million), the Ethnic Communities Council of Queensland ($11.1 million), Reconciliation Australia ($10.1 million) and Birdlife ($2.9 million).

Public broadcaster received $1.3 billion, while $584 million was paid to consulting firms, of which $254 million was spent by the Department of Defence. Among the firms tapped by ministry heading Australia’s army, navy and special forces include ACIL Allen Consulting, Bechtel, Partners in Performance, Ernst & Young, Deloitte, Rand Corporation, KPMG and PwC. Other firms that are taped by government officials include McKinsey, BCG and Bain – they are typically brought on board to oversee strategic initiatives. According to a previous Institute of Public Affairs (IPA) report, the federal government works with nearly 1,200 different consulting firms, for services such as strategy, organisation, project management, technology, engineering consultancy, financial planning and interim. 

According to a 2018 analysis, the federal government spent a total of $4.6 billion on consultants in 2017 (the IPA reports looked into “excess spending”). However, that amount was questioned by many, with some analysts pointing at systematic failures in defining and recording the fees accrued by consultants, leading to a figure that underestimated the actual situation. The news led to a riot in the government echelons, with the Federal Labor stressing that it would clamp down on consulting spend.

“The nature of the Canberra Swamp perverts liberal democracy, entrenches established special interest and represents a gross misuse of taxpayer money,” the IPA report concluded, calling for “deep-seated, structural reform” to Australia’s administrative state.


KPMG Law expands in Australia with launch of government practice

06 March 2019 Consultancy.com.au

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.