This article originally published in The Canberra Times on August 4th 2017. Click here for the original.
The government’s staggering spend on the biggest four consultancy firms puts its recent efforts to cut public service jobs and tighten spending in another light.
It’s not only the Coalition that used consultants such as Deloitte, KPMG, Ernst and Young, and Pricewaterhouse Coopers while outsourcing policy work. A 2012 analysis by The Canberra Times showed the previous Labor government spent half a billion dollars a year on consultants after the party won office four and a half years earlier.
The difference under the Coalition is that since Tony Abbott came to power in 2013, the government has preached public service austerity, imposed efficiency dividends and cut 15,000 public sector jobs.
The APS has had to tighten its belt, manifesting in destructive ways, not least a bitter multi-year dispute across departments over pay and conditions after the Coalition imposed a hardline industrial policy on its public servants.
Considering the government ratcheted up its yearly spend during this time on private consultants to $420 million in 2015-16, the public would be right to ask whether it has chosen its spending cuts and hikes judiciously.
While public service departments have risked losing capability by shedding jobs, more work has been outsourced to consultancy firms – including the big four, where government spending doubled in three years. According to one government expert, consultants are considered something of an extension of the public service. But despite their influence on public policy, they don’t answer to ministers and therefore not the public.
The government should take another look at its spending on consultants and consider whether the advice they’re giving would be better produced inside its own public service, more accountable to the public. Without a rethink, the government risks splurging hundreds of millions more on consultants for work the APS will lose capacity to carry out.
Considering the government’s fondness for spending on the big four consultants, they have power in setting prices. As Professionals Australia has warned, their work could come at a premium for many years.
The government’s nearly $1 billion spend over three years on the companies raises another question. If the public service isn’t capable of providing the advice the Coalition is seeking, why has it fallen short? If it’s job cuts holding them back, the money might be better spent getting staff numbers back up. Ultimately the public should know whether outsourcing this work is better value for money, or whether keeping it in-house would yield better outcomes. Right now, there is little hard evidence to justify the growing consultancy spend.
Finally, the government’s growing reliance on the big four consultants is vexed by the companies’ donations to the major parties. While the Coalition might award contracts to them regardless of these, it creates a potential conflict of interest. It’s up to the government to demonstrate how it manages that by showing why exactly these companies are the best for the jobs they’re awarded.