Morrison government spent $563 million on consultants in final year

15 May 2023 Consultancy.com.au 3 min. read
More news on

An audit of APS spending on consulting and outsourcing has revealed the former government racked up a $20 billion bill in its final year alone, with the current government making moves to curb the excess.

Vowing to slash $3 billion from Australia’s consulting and outsourcing bill in the lead-up to the last federal election, the Labor government last week released details of its public service audit on employment, finding the previous government forked out more than $20 billion on expert advice and temporary staff during its final year in office.

Labor has responded by including a number of measures in its latest budget to help address the issue.

Morrison government spent $563 million on consultants in final year

All up, the Morrison-led government spent $20.8 billion on consultants and outsourcing over the 2021-2022 financial year – the equivalent of almost 54,000 full-time staff, or 37 percent of the actual APS workforce across 112 agencies excluding the CSIRO, ABC, and parliamentary departments. Outsourced service providers made up almost 70 percent of the total spend, while more than a quarter went towards contractors and consultants.

Almost 90 percent of the outlay was concentrated in just five departments, with Defence gobbling up around 65 percent, while the Department of Veterans’ Affairs had the highest ratio of external labour (41 percent) against employed staff.

A particular focus of the audit was on the government’s reliance on consultants, finding that almost 1,000 full-time equivalent advisors were engaged over the twelve months of the review, at a massive cost of $563.4 million.

Commenting on the results, public services minister Katy Gallagher stated; “The Morrison government maintained its artificial cap on public servant numbers, promoting a mirage of efficiency, but were at the same time spending almost $21 billion of public money on a shadow workforce that was deliberately kept secret. Labor is committed to rebuilding the APS and ensuring that, where appropriate, jobs that need to be done are delivered by public servants.”

According to figures presented to the Senate inquiry on the matter, the current government has already made some inroads on its promise to reduce consulting costs, although it’s difficult to gain a clear overall picture with Defence – which accounted for over a quarter of the consulting spend in 2021/22 – withholding its spending data. Nevertheless, the Industry department expected a sizable drop of around $25 million, while Finance forecast a $13 million reduction.

Budget measures
The government has also announced a range of measures in its latest federal budget geared towards rebuilding APS capacity, including an initial one-year $2 billion splurge on upgrading government ICT and digital delivery systems – with that figure to almost double over a four-year period, even before the standard cost blow-outs. It’s also imagined a fair whack of that investment will be pocketed by the big consultancies for advisory and implementation services.

In that respect, the government is also laying the future foundations for its long-flagged in-house APS consulting function, with almost $11 million allocated for development costs. While the first phase of funding is a drop in the ocean compared to the more than half a billion dollars spent on consulting in 2021/22, Gallagher notes the project is still in its early days, and isn’t intended to replace consultants but rather augment their use for specific purposes where it can.