Australian universities are spending hundreds of millions of dollars every year hiring consultants, including from major firms PwC and Deloitte, even as wage theft scandals and redundancies rock the sector.
The nation’s 10 top-ranked universities alone paid at least $249 million to consultancies last year, more than they spent before the pandemic. Victoria’s eight universities spent more than $80 million between them.
Experts warn big consultancy firms overhype their expertise.Credit: Tamara Voninski
This masthead analysed annual reports and put questions to Australia’s 10 leading universities, as ranked by The TimesHigher Education, about their spending on consultants.
Experts warn that the so-called Big Four consultancy firms – PwC, KPMG, EY and Deloitte – are increasingly turning up on campus yet mostly operating in the shadows, with their work’s findings sometimes kept secret.
PWC has become embroiled in scandal in recent months for leaking confidential government information on tax laws to its corporate clients.
As the fallout throws a spotlight on government reliance on external consultants, universities have emerged as another key market – at times paying big fees for strategic and educational reviews academics say could be done in-house by leaders in the field.
Of the universities that disclosed their spending on consultants in 2022, the University of New South Wales (UNSW) topped the list at $38 million, while the University of Melbourne and the University of Queensland each paid out more than $37 million.
At Melbourne University, reported wage theft was the highest in the sector at $31 million. Kate Clark, one of the academics to receive underpayment compensation from the university this year, said it was “appalling that universities are still not paying their staff properly while spending this much on consultants”.
Universities in Victoria and Queensland have to disclose their consultant spending, but elsewhere the use of consultancy firms can be hard to spot in annual reports, sometimes listed under ambiguous titles such as “business services” or lumped in with other figures.
The University of Western Australia’s annual report says it spent $34 million on “professional fees” in 2022, for example, but it declined to confirm its consultancy spend when asked. The University of Adelaide spent $23 million on “consultancy and specialist services” and Macquarie University paid $47 million for “consultants and contractors” but did not provide a figure just for consultants.
The Australian National University said it couldn’t disclose its 2022 spend until its annual report was tabled in parliament, but previous reports reveal it spent $50 million in 2021 and $65 million the year before that.
At universities that did publish a detailed breakdown of their spending, specialist consultants such as architects and cybersecurity experts were often brought in, but business consulting was even more common.
Dr Alison Barnes of the National Tertiary Education Union said there would always be some reasons to hire consultants. But she said the union was particularly concerned about a growing use of expensive firms to handle restructures and redundancies, shifting more decisions about the future of higher education into the hands of auditors who rarely understand the sector.
“That’s how bad decisions happen,” Barnes said.
One UNSW staffer who was not authorised to speak publicly recalled how PwC “rolled through” the university in 2015. The firm was paid $25 million to help create its new 10-year strategy, leading to a major round of redundancies. “We’re still dealing with the fallout but it was a gravy train for them. They were carnivorous.”
On at least one occasion, a PWC consultant who had worked on the restructure moved into a high-ranking job at the UNSW soon afterwards.
A spokeswoman for UNSW did not comment on the restructure, but said the university used consultants for a wide range of projects critical to student education and experience. This included “future student recruitment, enhancing cybersecurity, academic program reviews and enriching the campus environment,” the spokeswoman said. “In 2022, UNSW ramped up spending on its core IT infrastructure, and the increased use of consultants in part reflects the difficulty of recruiting IT staff in a tight IT labour market.”
PwC did not respond to questions put to it by this masthead, saying it did not comment on client work.
UNSW spent $38 million on consultants in 2022.Credit: James Alcock
Professor Sharon Bell has been following the rise of consultants in universities, and said the “revolving door” between the Big Four firms, government departments and universities is well known. “You even see vice-chancellors going over to firms,” she said.
Experts such as Bell warn big consultancy firms sometimes overhype their expertise. This is especially stark when consultants are hired by the university sector, as the country’s top experts may already be on staff. Universities now also make lucrative revenue from consulting themselves.
Still, consultants put university executive boards at ease, Bell said. When they came under pressure to slim down after Howard-era reforms, they turned to the same consultants trusted by governments.
“So a big firm consulting became like a tick of approval on their application for infrastructure funding, say,” Bell said. “But now consultants have expanded beyond auditing, which is really their core expertise, into actual education and strategic planning.”
Firms will often apply corporate templates that don’t suit public universities, said Bell, who has sat through many consultant reviews during her in 30 years in academia. “They’re always beautifully presented, with great graphics, but that polish hides the noise, the context, you need for complex decisions.”
At the University of Melbourne, some academics have questioned why a real estate and investment firm was hired to run a “teaching and learning strategy review” of the Faculty of Engineering and IT, for example.
A University of Melbourne spokeswoman said using a wide range of consultants “to better inform and guide our processes and operations ... allows the university to focus on its research and teaching”.
The university spent $10 million across the Big Four firms in 2022, she said, but about half of that was “the first phase of a major IT and HR replacement system project”. The university spent $15.6 million more on consultants in 2022 than it did in 2019. But the spokeswoman said this still only “represented 1 per cent of total expenses”.
Monash University’s consultant bill has also been ramping up, rising from $11.7 million in 2019 to $16.6 million last year, and La Trobe University’s jumped from $7 million to $10.8 million in 2022. La Trobe and the University of Queensland said much of their consultancy spending last year related to major infrastructure builds.
Across NSW universities, the state auditor-general found that spending on both consultants and contractors was also rising after a pandemic lull, jumping by $92.9 million – or 25 per cent – between 2021 and 2022.
At The University of Sydney, where the spending disclosed sat in the lower end for Australia’s top 10 universities in 2022 (at $17 million), a spokeswoman said: “We are fortunate to have a range of expertise at the university”. But, she added, bringing in consultants could introduce an objective perspective or allow staff to upskill “through relationships with industry experts”.
PwC was among the consultancy firms most commonly brought in by universities.Credit: Eamon Gallagher
Dr Ben Eltham, who is researching the use of consultancies by Australian and Canadian universities and is president of the Monash University branch of the union, said there wasn’t enough transparency around the big firms on campus. “At institutions that are all about open research, this stuff is happening in the shadows,” he said. “You never get to see these consultant reports. They’re kept in a drawer in the [vice chancellor’s] office.”
“And universities seem to forget consultants are profit-driven,” added Bell. “They will tailor findings to their client. Sometimes it’s just about telling management what they want to hear.”
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