The federal government has signed up for $850 million in spending on the largest consultancy firms since COVID-19 erupted in Australia, despite warnings that contracts with consultants were undermining public service skills.
Figures from government contracting website Austender show Commonwealth agencies have entered $854 million worth of contracts with major consultancies Deloitte, Ernst and Young, KPMG and PricewaterhouseCoopers since the first COVID-19 case in Australia on January 25 last year.
Most of the spending will go towards management advisory for government agencies, which will cost $364 million under the full value of contracts for those services.
Other major categories for the bureaucracy's new contracts with the "big four" consultancy firms are economic or financial evaluation of projects ($69 million), IT, broadcasting or telecommunications components ($65 million), IT consultation ($57 million) and computer services ($39 million).
Finance Minister Simon Birmingham said the public service had played a critical role in keeping Australians safe during the COVID-19 crisis, and it continued to deliver increased levels of government services.
It had achieved this partly by using external expertise for set periods to address time-limited tasks, he said.
"External expertise during the COVID-19 pandemic has assisted the government's response, particularly when need for additional support has been temporary, project specific, or is highly specialised in nature," Senator Birmingham said.
"It is always the government's expectation that workforce decisions provide the best outcomes for taxpayers and that's why we adopt flexible approaches to resourcing that strike the right balance between a core workforce of permanent public servants and the use of external expertise for additional temporary support which also strengthens the overall capability of the APS."
Labor MP and deputy chair of Parliament's public accounts and audit committee, Julian Hill, said the money would be better spent rebuilding the capability of the public service to deliver high quality services directly to Australians.
"The COVID-19 pandemic has been very profitable for the big consultancy firms, aided and abetted by the Morrison government's disastrous policy to cap staffing levels," he said.
"The public service has never been busier supporting the response and recovery from this crisis, yet Scott Morrison is forcing agencies to privatise critical work at great expense.
"At a time when every dollar is borrowed, it beggars belief that the Morrison government would allow almost $1 billion to flow in contracts to consultants to do government work."
The big four consultancies nearly tripled their income from federal government contracts between the Coalition's ascent to power in 2013 and 2017-18, winning contracts worth a combined $562 million that financial year.
Critics of the spend have pointed to the bureaucracy's shrinking workforce and the Coalition-imposed staffing cap as one of the main causes.
The government announced in last year's federal budget it would introduce a whole of government procurement panel for consultants, a move it said would get better value for money, increase transparency and reduce administration.
A major review of the public service led by businessman David Thodey and delivered in 2019 said the government's growing reliance on consultants and contractors had given rise to "credible" concerns that the capabilities of the public service were in decline, including a "hollowing out" of strategic policy skills.
"These increases have occurred against the backdrop of a significant increase in the size of the programs administered by the APS but almost no increase in departmental budgets," the review said.
"The data suggest that contractors and consultants are being used to meet the increased burden of program delivery - work traditionally done by APS employees - as well as policy design and implementation."
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