Over the past 18 months, various reports have emerged documenting the billions in taxpayer funds that have flowed to consultants, especially the Big Four accounting firms.
In September 2016, Michael West reported how the Big Four accounting firms had 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 advised 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:
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…
In August, The Australian’s David Crowe reported that the nation’s big four consulting firms had 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.
And in December, the Australian National Audit Office reported that federal government consultancy contracts established because of “need for specialised or professional skills” grew from more than $200 million in 2012-13 to more than $500 million last financial year, with the Big Four’s fee revenue more than doubling.
Now, a former Department of Defence and Business Council of Australia boss has labelled the federal government’s consultancy spend “stupendous” and claims that much of the $130 billion in federal government external spending should have been carried out by permanent public servants. From The AFR:
Paul Barratt, a former Primary Industries and Energy Department boss who was sacked as Defence secretary by the Howard government in 1999, has told a parliamentary inquiry into federal government procurement that outsourcing of government work to major firms was leading to a “deskilling” of government agencies and might be unnecessary…
Mr Barratt said much of the cost included work that was core government business and the prime responsibility of public servants…
He said among more than 1700 contracts, $2 billion was for consultancy services and other spending with the big four consulting and accounting firms Deloitte, EY, KPMG and PwC…
“These are stupendous sums of money. One could establish a great deal of in-house capacity with sums like these and they no doubt sustain a great deal of capacity within the firms that sell their services to the Commonwealth,” Mr Barratt said.
“The amounts spent are the more remarkable when one considers that the largest category over the five-year period is management advisory services.
“One would imagine that managing large organisations is core business for the APS … and one would expect that they ought to be pretty good at it.”
He warned a “wholesale resort to the purchase of external advice and services” could not be explained away by cost saving or the temporary acquisition of skills.
“The sums of money being spent on the purchase of management services suggests that the purchases do not simply relate to matters for which the Commonwealth agencies do not have the skills in house and do not have a continuing need for them,” he told the inquiry.
As I have noted previously, 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.
The days of “frank and fearless advice” have disappeared in favour of spin and compromised analysis designed to support a pre-conceived political agenda.
