The amount of taxpayer money given to the big four consultancy firms for management advisory services has increased by more than 1,270% in a decade, according to new analysis from the Centre for Public Integrity.
The analysis comes as the big four face intense scrutiny after disclosing the misuse of government information and multiple conflicts of interest, as well as concerns that taxpayers are being ripped off for work the public service once conducted itself.
In 2012 the federal government spent $44m on these services, which include audits, project management and strategic advice. In the last financial year the bureaucracy spent $605m, with the largest share of that money going to KPMG.
The increase was mostly due to a huge increase in demand from the defence department, which accounts for almost 80% of KPMG’s management assurance contracts, the analysis found. But the Centre for Public Integrity found it was “very difficult to identify precisely what Defence is procuring” based on publicly available information.
“Current procurement disclosure requirements and practices mean that precisely what is purchased with taxpayer dollars is frequently opaque, leaving government unable to assure the public that they are receiving value for money,” the report said/
“A sample includes such descriptions as ‘business support services’, ‘process and resource review’, and ‘logistic service provider’. What is meant by any of these descriptions is unknown.”
Defence was contacted for comment.
Geoffrey Watson, a board member at the Centre for Public Integrity, said it was difficult to properly assess the consultancy spend without more information being provided.
“Without it, how can the public be expected to have confidence that they are actually getting value for money with the enormous sums of money that are being used to procure these services, which are almost certainly at times within the core function of the public service,” Watson said.
Spending on consultants spiked when the federal government imposed staffing levels caps, which were first introduced by former prime minister Tony Abbott and removed by the Albanese government. When the staffing caps were reached, departments often turned to consultants who did not count towards that cap.
The former competition watchdog head Prof Allan Fels has warned consultancy firms have been able to charge higher rates as the public service becomes more reliant on their services. He has called for new rules governing how taxpayer money is spent.
“We need public criteria about the circumstances in which governments can engage consultants,” Fels said. “It is essential that the criteria specify that core functions of democracy should not be outsourced.”
The finance minister, Katy Gallagher, on Monday said the commonwealth’s reliance on consultants was worse than she initially expected and warned that would take time to change.
“We’re taking steps to rectify that, but it’s going to take a bit of time because of the way the imbalance has occurred over particularly the last five to seven years,” Gallagher told the ABC.
“There will always be things that you need to seek external advice from, but at the moment, the balance is out of whack.”
The shadow treasurer, Angus Taylor, who worked as a consultant before entering politics, said a rethink on consultant use was required.
“Knowing when to use them, and how to use them, is something the government needs to get better at. There is no question about that,” Taylor told the ABC.
Andrew Podger, a former Australian public service commissioner and former health department secretary, has previously told an ongoing Senate inquiry that consultants may be influenced by commercial motives when giving government advice.
“There is a [risk], when you become reliant on consultants and the consultants also want to continue to get business, that they may tailor their work in order to ensure that they get future business and they won’t necessarily be as independent as you would desirably want,” Podger told the inquiry earlier this year.
“I think this does occur from time to time.”
The big four consulting firms include PwC, Deloitte, KPMG and EY.
