Despite targets to cut spending on consultants and contractors, the amount spent by Victorian government departments between 2018-2022 increased by 47 per cent.

Based on what departments published in their annual reports and other data they provided, the public service spend on contractors and consultants was $2.8 billion in 2018–19 and $4.2 billion in 2021–22, Victoria’s Auditor General says.

“Public service spending on contractors and consultants increased between 2018–19 and 2021–22, despite the spending reduction targets,’ Auditor General Andrew Greaves says in a report released on Wednesday.

Across the four years, Victorian government departments spent $561 million on consultants and reported spending $11.1 billion on contractors, with 57 per cent of the total spend – $32 million – going to the top five vendors.

For the period between 2017-18 and 2022-23, $821 million was spent on consultants with a total of $434 million going to KPMG, EY, PWC, Deloitte and Boston Consulting Group.

Election commitment

The Victorian government made an election commitment in 2018 to reduce spending on services that could have been performed by public service staff. 

The spending reduction targets over four years (2018–19 to 2021–22) aimed to reduce spending by a total of $114.5 million.

That included $90.1 million reduction on professional services and a $24.4 million reduction on labour hire. 

Lack of transparency

The report is critical of the fact that Victorian government departments aren’t required to consistently record, monitor or report on what they are spending on contractors and consultants.

“This results in a lack of transparency,” Mr Greaves said. “From 2018 to 2022, the Victorian Government set targets to reduce departmental spending on contractors and consultants, but the government did not publicly report progress against these targets.”

The report warns that consistently outsourcing work that has traditionally been done by the public sector can deskill the state’s public service and cost significantly more.

“Victorians expect public spending to achieve value for money,” the report says.

“In particular, there has been concern about departments relying on external firms for services that are central to the running of the public service.

“These ‘enduring public service functions’ include activities such as developing policies, writing business cases and facilitating events.”

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