Federal departments will soon be under unprecedented pressure to justify the billions of dollars of taxpayers' money they spend each year, according to a leading private consultancy.

The Noetic group says most government organisations cannot demonstrate the benefits from large and expensive programs of work, and this is unlikely to be tolerated in the new era of ''fiscal responsibility''.

But the group's chairman, Andrew Balmaks, says the blowtorch is about to be applied to government spending decisions like never before, with the commission of audit and the May budget expected to create a whole new landscape for accountability.

 

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Noetic is best known in the federal sphere for its work in the defence sector, but says it has helped Victorian government organisations save up to $73 million in five years, helping to clearly define the goals of spending projects before they begin.

Noetic's latest advice bulletin to clients says a business-as-usual approach from the federal public sector is ''unlikely to be tolerated in the new era of fiscal responsibility''.

''Quite simply, government departments haven't been truly under pressure to deliver value for money on taxpayers' money,'' Mr Balmaks said.

''Within recent time, it hasn't been the focus, certainly not measuring and proving it.''

Mr Balmaks cited big-spending projects, such as a departmental IT upgrade, as an area where money could be difficult to account for.

''The return on investment might not be immediately recognised in a faster work flow or increased productivity,'' he said.

''Greater effort is needed in identifying measurable benefits from the start of the process, before you make an investment decision.

''Money is only going to get tighter and managers will be held accountable for evidence of a real impact on productivity, and ultimately of real benefits for Australians from the taxpayers' investment.

''The onus will be on them to show how an injection of money at point A resulted in an overall improvement by point B.''

Mr Balmaks said that in the new fiscal environment, mindsets in some public-sector organisations were going to have to change.

''What needs to change is that departments need to demonstrate value for every public dollar they are given,'' he said.

''That's where the Treasurer is really putting the heat on, and that's what's coming out through the commission of audit. And if you can't demonstrate it, you shouldn't be spending it.

''Certainly departments will be held to much greater account, they'll be needing to demonstrate to the government why they need their budget.''

Mr Balmaks predicted there would be greater pressure for departments to explain the goals of spending before they embark on a project.

''One way of doing that is being able to articulate that there's evidence that you need to make an investment and being able to articulate the benefits it will produce - essentially putting forward an argument backed up by evidence,'' he said.

''The whole point of the public sector being given money is to deliver some sort of service, so what you're trying to do is provide greater accountability and assurance that the money provided to taxpayer departments is actually delivering the services they are supposed to.''