The buying-in of skills and services by federal, state and territory government departments has little in common with capital city real-estate prices save one feature – their growth appears limitless. Two examples illustrate: Since January 2009, Sydney's real estate prices have nearly doubled, while here in Canberra, the ACT Health Directorate's spending on consultants and contractors has more than tripled in the past four years, from $5.5 million in 2012-13 to $18 million last financial year.
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To give that $18 million figure some context, total health directorate expenditure in 2015-16 was just over $1.025 billion. Nevertheless, $18 million is not an insignificant outlay. The bulk of it appears to have gone on IT services, in line with the long-standing practice of state and federal governments outsourcing such functions wherever practicable. But at least $2 million seems to have been spent on hiring consultants to review clinical services and to identify ways and means of improving hospital patient care, even though it might be argued the directorate is able to perform such functions .
That bureaucratic work once routinely done in-house is now farmed out to consultancy firms owes much to the triumph of neoliberalism. Anything government can do, so the argument goes, the private sector can do more efficiently and cheaply – save for defence and foreign affairs. That viewpoint has been strengthened, if anything, by the ever-expanding complexity of delivering health, welfare and other government services.
When consultants boast MBAs from prestigious business schools it's easy to believe that management standards will rise and efficiencies will materialise. But an incoming tide of MBAs does not lift all boats. Consultants need to be chaperoned while they make sense of their new working environment, a task that generally falls to middle management. Many find it demoralising work, the more so because there's little scope for skills transfer. Indeed, the habitual use of management consultants might been seen as leading ultimately to the de-skilling of departmental and agency workforces.
Public servants exiting their jobs (often with superannuation or redundancy packages) only to return shortly after wearing a private contactor's hat is one manifestation of this. Bizarrely, this costly (for taxpayers, at least) practice is tolerated because senior managers care less about hiring contractors than they do about responding to political edicts to cut public servants numbers. A similarly cavalier approach is evident in the response to service failures stemming from the use of outside contractors, particularly in IT. The census-night computer meltdown at the Bureau of Statistics was one such debacle, though it pales in comparison to the botched rollout of a new health payroll system in Queensland in 2007, and exercise which ended costing Queensland taxpayers $1.2 billion.
The mindset of "small government is good" means senior public servants will continue relying extensively on management consultants. But they have a duty not to fall into the trap of thinking that the only good advice is outside advice.
