Labor hiding truth of its consultancy spend: Albanese vies with Morrison for top billing

Anthony Albanese spends as much as Scott Morrison on the services of KPMG, PwC, EY and Deloitte, according to new analysis. Meanwhile, little known Nous is stirring up the incumbents carving out a steady pot of fee-rich work.

The PwC scandal that exploded into public consciousness two years ago brought to light the conduct of the secretive professional services industry. Picture: NewsWire / Andrew Henshaw

Australians have been misled into believing Labor has slashed the amount of taxpayer money it spends on expensive consultants in the wake of the PwC tax leaks scandal.

The Albanese government spent just over $660m on consultants in the year to May 2024,

according to AusTender data reviewed exclusively for The Australian.

The PwC scandal that exploded into public consciousness two years ago brought to light the conduct of the secretive professional services industry, where multinational clients of PwC were advised how to sidestep Australian laws in a breach of confidential information.

Labor, acting on the advice of multiple inquiries, promised to invest more in public servants and less in consultants.

In fact, the data shows consulting budgets have simply been reallocated away from the big four firms — PwC, KMPG, Deloitte and EY. A little known beneficiary of this is a firm mostly run by former public servants, known as Nous.

University of Wollongong professor of Practice and KPMG whistleblower Brendan Lyon Picture: Nick Cubbin

“Federal consulting spend has moderated somewhat but the big four still charged taxpayers $5.5bn dollars in the past five years, seeing about $600 of each Australian household tax bill go to a big four consulting firm,” estimated former KPMG partner Brendan Lyon, who is now a professor at the University of Wollongong.

Mr Lyon was himself a former KPMG partner turned whistleblower.

Data from AusTender spanning Commonwealth projects suggests consulting spend peaked under the Morrison government at $680m in the year to May 2020. The next highest was the year to May 2024, under Mr Albanese, and during which time EY, KPMG and Deloitte were the first, second and third-largest recipients.

Nous has filled the hole left by PwC, which sold its consulting division now known as Scyne Advisory.

Little-known Nous has 62 “principals” according to its website, with more than two-thirds having previously worked for the government. In contrast, Scyne has 75 partners after its latest round of job cuts.

Reported consulting spend does not tell the full story. In the year to May 2024, AusTender data indicates EY, KPMG and Deloitte received Commonwealth consulting contracts totalling $145m, but wider analysis of income reported in other categories implies taxpayers were billed in excess of $470m in that year.

That does not include NBN Co, Western Sydney Airport, ARTC and other government-owned bodies not required to report to AusTender.

In Labor’s costing document released on Thursday, one of its key policies is a “crack down on waste, rorts and mismanagement, including by conducting a waste audit and by trimming spending on consultants, contractors and labour hire”.

This week, the PM and Treasurer Jim Chalmers were accused of “cooking the books” over their declarations they would strip $6.4bn of costs from the budget over four years by reducing their reliance on consultants and external labour.

Mr Lyon points out there has been no increase in transparency or accountability by federal or state governments even after the recommendations of various inquiries at the Senate and state levels.

“For all the noise of the Senate inquiries and well-placed concerns of the public there have been no changes in law to control the big four, and no changes to make government procurement transparent and accountable, meaning the problem is likely to reoccur once focus moves to other issues.”

Former PwC employee Peter Collins. Picture: Luis Enrique Ascui

Labor has refused to spell out what it spent on consultants since taking office and finance minister Katy Gallagher didn’t respond to emailed questions. Greens senator Barbara Pocock has accused the government of using sleight of hand and called for reforms to the way contracts are reported on AusTender.

“It’s virtually impossible to get a clear picture of the government’s spending on consultants,” said Ms Pocock, whose office derived its own estimate from AusTender and came up with a comparable figure to The Australian.

She points out that of the $527m in targeted savings reported in the Strategic Commissioning Framework last year, only $2.7m, or 1 per cent of targeted savings, was for consultants.

“This suggests that the bold claims from Labor about cutting consultant spending are little more than hot air,” Ms Pocock said.

“This obfuscation is intentional and serves the interests of the government who want to create the impression that they are taking effective action when in fact they are hiding behind a wall of meaningless data with no access to the most important details of the procurement process,” she added.

The issue of secrecy around procurement came up repeatedly in the two Senate and two NSW inquiries, with questions posed about the lack of transparency around which firms get certain contracts and why so many massive ticket items are either not put to tender, allowed to exceed budget parameters, or spread across multiple pools of taxpayer money.

One partner of a big four firm, who would not be named for fear of jeopardising future contracts, said in the past few years, it was being beaten by Nous, even though Nous was charging a similar price for its work and had less experience.

“It seems unfair when we are competing with people who used to work at same government department,” the person said.

Originally published as Labor hiding truth of its consultancy spend: Albanese vies with Morrison for top billing