Public servants go into a spending frenzy towards the end of the financial year, blowing more than three times as much taxpayers' money than in other months.
A Fairfax analysis of more than 60,000 federal government contracts has revealed stark evidence of bureaucrats' "spend it or lose it" approach to budgets, which encourages agencies to use up all their funds rather than hand the money back.
This analysis is remarkable and damning. We will charge a commission of audit to look into this if we win government.Coalition finance spokesman Andrew Robb
The government's largest workplace, the Department of Human Services, has one of the worst records.
Over the two years examined, it entered into 984 short-term contracts worth $157 million. Of them, $123 million worth – 78 per cent – began in May or June.
Its spending spree covered a wide range of purchases, especially staff training, temporary recruitment, office fit-outs and IT services.
Opposition finance spokesman Andrew Robb described the findings as "remarkable and damning". The Coalition would investigate them as a priority if it won office, he said.
However, the government denied the trend was a sign of wasteful spending, saying it simply reflected the budget cycle.
The investigation analysed 60,605 short-term contracts – a means of spending money quickly – to find evidence of what public servants call the "spend-up season".
Government agencies have long rushed to get rid of leftover funds towards June, lest the Finance Department cite unspent money as a reason to cut their budgets.
This incentive to spend has led to anecdotal accounts of wild end-of-year splurges on travel, equipment and consultancies, though, until now, the public has lacked any quantitative evidence of it.
- Comment: Colourful tales of bureaucracy's budget games
- Analysis: End-of-year profligacy is a curable curse
- Government response: Explaining the spending
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Mr Robb said such spending was a decades-old problem that had affected many governments, but he was shocked by its extent.
"This analysis is remarkable and damning. We will charge a commission of audit to look into this if we win government ... We will make it a priority."
He said the commission would also consider giving agencies more scope to carry over funding from one year to the next, and to increase scrutiny on spending in the last quarter of the financial year.
"It's a bit rich that [Finance Minister] Penny Wong's out there talking about savings and this is happening right under her nose ... The analysis is so stark and remarkable that I would expect the Finance Minister to hear the alarm bells ringing. This must be fixed."
Former Labor finance minister Lindsay Tanner acknowledged the problem a few months before he retired from politics in 2010, saying it was "endemic to any system where you have annual budgeting".
He said the only effective way to fight the waste was to ramp up scrutiny on public servants, and hope the shame of getting caught would prevent them from abusing funds.
However, Senator Wong disagreed with Mr Tanner and denied the end-of-year spending was wasteful or discretionary.
Her spokeswoman said: "The contract start date represents the end of the procurement cycle, which includes development, time to market and approval processes of weeks or months' duration.
"The trend of agencies' procurement activities reflect the budget cycle, and are consequently back-loaded in the second half of the financial year. This pattern is consistent across agencies and reporting years."
Senator Wong's spokeswoman said individual agencies were responsible for ensuring their spending was in line with government policy, and the Auditor-General regularly audited their purchases.
The Department of Human Services' spokesman, Hank Jongen, also rejected "any assertion about wasteful spending".
All departmental purchases were "conducted to achieve priorities within the budget cycle and to gain maximum value for money".
Mr Jongen said short-term contracts were just a small proportion of the department's operating budget of $4.3 billion.
"There is a range of procurement activity required over these months to prepare for July 1 changes to payments and services, which have to be implemented across the Australian government's primary service delivery network – from updating systems to distributing public information and communicating new initiatives."
He said decisions in the federal budget in May each year also triggered work on legislative changes or new programs, which led to the need to spend more at that time of year.
with Hamish Boland-Rudder