Consultants boom, bureaucrats bust: the hidden cost of public service cuts

Top consultancy firms have cashed in on lucrative federal government contracts despite the Coalition promising to eliminate public sector waste and slashing up to 15,000 jobs.

A Fairfax Media analysis reveals spending on consultants increased by 19 per cent during former prime minister Tony Abbott's first two years in office.

The splurge coincided with the Coalition cutting public sector jobs to the lowest level in nearly a decade, leaving the departments to turn to the big four firms.

During Labor's time in office – when the size of the federal bureaucracy peaked – spending on consultants dropped every year, falling 32 per cent over five years.

The Melbourne School of Government's foundation director, Helen Sullivan, said politicians were obsessed with consultants and often without reason.


"Governments are fascinated with consultants," she said. "It doesn't matter what political stripes they have and they are particularly enthralled with the big four."

Ernst & Young, PricewaterhouseCoopers, KPMG and Deloitte collectively secured $194 million of work since the Coalition's election to December 2015.

Many top firms, including Deloitte and KPMG, donated more than $150,000 to major political parties during this period.

"Public servants often go to consultants to reinforce a message because the politicians will take it more seriously," Professor Sullivan said.

An adjunct professor at the Crawford School of Public Policy, Leo Dobes, said consultants were often hired to tick off government ideas.

"The big four are always getting jobs with the government and it makes you wonder why because, if they have been giving robust advice, surely they would be on the nose?" he said.

"But that never seems to be the case. No matter who is in government."

Community and Public Sector Union national secretary Nadine Flood said the use of consultants was wasteful, serious and a growing problem.

"The Turnbull government talks about eliminating waste yet at the same time is throwing away literally billions of dollars to their multinational consultancy firm mates ..." she said.

Finance Minister Mathias Cormann was contacted for this story.

His office said consultants accounted for 1.2 per cent of total government contracts between 2009 and 2013. This had since fallen to 0.9 per cent.

Labor finance spokesman Brendan O'Connor vowed to limit spending on consultancy firms during the election campaign.

A Parliamentary Budget Office analysis, which examined a broader range of contracts, showed $1.9 billion was spent on business and administrative services during 2013-14. A year later, it was $2.3 billion.

Dr Dobes, a former Defence and Treasury official, said the consultancy boom reflected the bureaucracy's declining skill set.

"There has been a hollowing-out of skills across the public service as departments focus more on teamwork and generalists," he said.

"I see a lot of public servants who do not understand the very basics of cost-benefit analysis and that makes me worry."


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