Back in September, Michael West reported how the Big Four accounting firms have taken corporate welfare to an extraordinary level, earning up at least $2.6 billion in fees from the Australian government over the past ten years at the same time as they advise multinationals on how to avoid paying tax.
It was a theme also picked up over at Fairfax, which revealed that while the Abbott Government was busy slashing the public service, the Big Four accounting firms cashed in:
Then in June, Adam Creighton noted the hyper-inflation of consultants since 2012, many of whom are sucking at the taxpayer teat:
The ranks of the phantom public service have been steadily expanding, and governments should tell the public by how much…
The number of “management and organisation analysts” in Australia — an occupation category that includes management consultants — has grown by 8000 since 2012 to about 60,000, according to the Australian Bureau of Statistics.
The share ultimately dependent on government money is probably high. Australian state and federal governments spent $1 billion in 2015, 7.5 per cent more than a year earlier… Governments were their third biggest source of revenue, in fact…
The growth of consultants reflects a broader dereliction of duty by political and corporate leaders, who either can’t make a decision or want to blame someone else if their ideas turn out to be duds.
Yesterday, The Australian’s David Crowe reported that the nation’s big four consulting firms have reaped a $1 billion in fees from the federal government over the last three years as the public service turned to outside contractors to do more work:
The spending surged in the first full year after Tony Abbott took power and kept growing under Malcolm Turnbull to reach $420.4 million last year, putting it on track to hit another record unless the government reverses the trend toward outsourcing…
The spending on the big four consulting firms across the federal public service rose from $196.4m in the year to June 2014 to $381.7m the following year and $420.4m the following year.
Senator Xenophon said the “exponential” increased raised serious questions about the spending.
“Surely there’s enough expertise amongst 243,000 commonwealth public servants to have provided a lot of these services that taxpayers have forked out nearly a billion dollars for in just three years,” he told The Australian.
“The government needs to urgently explain why at a time of belt tightening for practically everyone else, they seem to have let it rip for the big four accountancy firms…
KPMG won contracts worth $395.1m over the three years, followed by Ernst & Young with $270.7m, Deloitte with $223.6m and PWC with $109.1m. This added up to $998.5m.
There are several reasons why governments prefer to use consultants over the public service.
Most notably, it provides them with cover. They can claim that a given policy is based on “independent advice”, even though the results are often pre-determined and effectively purchased. It also allows governments to deflect blame to the consultancy firm (read cover their arse) in the event that a policy goes bad.
However, the problems run deeper than merely replacing one set of workers with a more expensive set of workers. It also reflects the broader loss of independence and the politicisation of the public service, whereby governments of both persuasions are now too willing to outsource policy development to consultants or (erroneously named) think tanks.
Add in the seemingly unbridled growth in the number of staffers and advisors in ministers’ offices, and the role of departments in policy formulation and advice has been badly diminished.
Sadly, the days of “frank and fearless advice” have disappeared in favour of spin and compromised analysis designed to support a pre-conceived political agenda.