Health, Defence two biggest consultancy spenders in 2022-23

The health department was one of just four of the 16 departments to spend more on new consultancy contracts in the 2022-23 financial year, including the departments of Foreign Affairs and Trade, Attorney-General's and Prime Minister & Cabinet.

Defence spent the second-largest sum on new consultancy contracts, at $25.6 million, but also exempted 224 contracts worth a total of $1.03 billion from publication for national security reasons. That figure could include both consultancy and non-consultancy contracts.

The Department of Employment and Workplace Relations and the Department of Climate Change, Energy, the Environment and Water also spent above $20 million on consultancies last financial year, while the other departments and two major agencies - the Australian Taxation Office and Services Australia - spent below $11 million.

But factoring in ongoing expenditure on consultants, which includes active contracts entered into in previous years, Defence's bill soars above the rest at $178.3 million, followed by Health at a total of $83.9 million.

Earlier this year, Defence introduced a moratorium on contracts with former staff who had taken up consulting roles within 12 months of leaving the department. The move followed allegations in an ABC report that consultants at big four firm KPMG had billed the agency for hours they had not worked. A Defence investigation did not find any evidence to substantiate the allegations, but a procurement audit triggered by the report identified room for improvement in the department's processes.

The figures, released in annual reports and analysed by The Canberra Times, reflect a broad shift by the Albanese government to slash spending on external labour and develop capability in the Australian Public Service. The government has now shifted the onus to agency heads to reduce reliance on external labour.

The data reflects agencies' actual expenditure on contracts over the financial year, while values reported on the government's online portal, AusTender, represent the committed value for the course of the agreement.

The figures don't include procurement outside of consultancies, where Defence reported the largest sum of new contract expenditure, at $5.1 billion.

Health's contracts represented a $7.6 million increase in actual expenditure on the 2021-22 financial year, with just over a third of the department's spend on consultants going to big four firms. Ernst&Young received $8.8 million while PricewaterhouseCoopers collected $8.6 million, KPMG $5.7 million and Deloitte $4.2 million. Defence's spend on new consultancy contracts tumbled by $27.1 million in 2022-23 compared to the year prior.

KPMG received the largest share of its 2023 expenditure, scooping up $20.1 million, followed by GHD at $18.1 million, PwC at $9 million and Deloitte on $8.8 million. Services Australia spent the least by far on new consultancy contracts in 2022-23, at $186,399, followed by DFAT which spent $2.2 million, and PM&C at $2.4 million.

The Australian Public Service Commission released new advice last month, requiring agency heads to set targets to reduce their reliance on outsourced labour by June 2024, and report on their performance annually.

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