The big four consultancy firms were paid more than $2 billion by the federal government for vaguely defined "management advisory services" contracts while public service staff caps were in place, according to an integrity watchdog.
Subscribe now for unlimited access.
or signup to continue reading
The value of government contracts for management advisory services (MAS) provided by PwC, KPMG, Deloitte and EY has exploded in the past decade, from $44 million in 2012-13 to $605 million in 2021-22, to reach a total value of $2.5 billion, the report by the Centre for Public Integrity has found.
The centre said the increase was particularly profound after the Abbott government's Average Staffing Level (ASL) cap for the public service came into effect in 2015.
An analysis of AusTender data by the centre showed expenditure on management advisory services provided by the big four quadrupled from less than $93.5 million in 2016-17 to more than $394 million in 2018-19 before reaching almost $605.8 million in 2021-22.
READ MORE:
The ASL cap was set at 167,596 in the 2015-16 budget and was accompanied by a dramatic increase in the use of external consultants by the public service.
The Australian National Audit Office reported that in 2017 spending on consultancies was almost double what it had been in 2012-13.
During the 2022 election campaign, Labor pledged to scrap the staffing cap, arguing it had "impacted on services provided to Australians, eroded public sector capability, reduced job security and wasted taxpayer funds".
In its report, the centre criticised the lack of detail about management advisory services contracts provided on the AusTender website.
It said descriptions included "unintelligible terms" such as program and product management service and support, project documentation suite services continuation, development strategy and strategic support services.
It said the descriptions from the providers themselves were similarly opaque, leaving the public little the wiser on what hundreds of millions of dollars was being spent on.
"The dearth of meaningful transparency in respect of procurements costing Australian taxpayers vast sums is deeply concerning," the report said.
The centre said the heavy use of external consultants helped undermine public accountability.
"The explosion in the value of MAS contracts presumably reflects an increase in the outsourcing of management and strategy decisions which must be able to be held accountable," the report said.
"Yet insofar as consultants are external to government, they are exempt from existing government accountability mechanisms."
The centre said the consequences of this lack of accountability was "clearly evident in the recent PwC scandal".
In the scandal, the Tax Practitioner's Board found PwC Australia's former head of international tax, Peter-John Collins, shared confidential information about government plans to tighten taxation of multinationals with other staff at the firm.
PwC has given a parliamentary inquiry into the scandal the names of 63 current and former partners who received an email with the leaked confidential information.
The committee has not shared the names, and instead called for PwC to release the unredacted emails, which it says would provide insight into individuals' involvement.
It has also named four former partners involved in the leak and has also provided the inquiry with the names of nine partners forced to take leave.
Deloitte Australia chief executive Adam Powick and EY Oceania chief executive David Larocca have appeared before a Senate committee inquiry into the governments use of consultants this week.
But the centre said if those involved in the scandal had been public servants, they could have been held directly accountable by government.
Of the four consulting forms, KPMG grabbed the biggest share of management advisory service contracts, winning work valued at $1.011 billion in the decade to 2021-22. Over the same period, Deloitte secured contracts worth $628.5 million, PwC $546.8 million and EY $350.7 million.
The Defence Department was by far the biggest customer over this period, according to the report. Almost 80 per cent of KPMG's MAS work ($803 million) was with the department, while for Deloitte is twas almost 55 per cent ($345 million), PwC 42 per cent ($228 million) and EY 26 per cent ($93 million).
The centre said it was not suggesting that public money was being misspent, but "the current system of accounting for government procurements gives little detail about precisely what is being purchased.
"Taxpayers are not given sufficient information to build confidence that they are getting value for money."
It called for a cap on the use of consultants, more detailed reporting on their use, enhanced AusTender disclosure requirements, and "re-centering" the public service as the government's main source of policy advice.
We've made it a whole lot easier for you to have your say. Our new comment platform requires only one log-in to access articles and to join the discussion on The Canberra Times website. Find out how to register so you can enjoy civil, friendly and engaging discussions. See our moderation policy here.