Exorbitant consultant costs swell government labour budget

The entire commonwealth government payroll — army, navy, public service in Canberra, Australia Post, Reserve Bank, you name it — cost just less than $21.1 billion last year. Meanwhile, the government spent a further $9.7bn on consultants, labour-hire companies and items such as leases — enough to pay once over again almost half of those 239,800 employees that the ABS estimates rely on the federal government for their earnings.

That’s incredible. What the Finance Minister says is “appropriate” spending, intended to “keep the cost of commonwealth administration low, flexible and efficient”, is 46 per cent of the cost of all public spending on wages and salaries. That’s some price for flexibility! Perhaps the target of the royal commission should have been the efficiency of government spending on third parties, rather than banking. Critics say cuts to the core public sector are to blame, which seems partly right. The Australian Taxation Office, for example, increased spending on labour-hire firms by $154 million to $331m over the two years to 2017 — roughly offsetting its 1170 reduction in headcount (to 17,900) over the same period.

The problem isn’t the increase. The core federal public service has fallen only 9 per cent to 153,000 since it peaked in 2013. That fall can’t explain the $2.6bn spent on management advisory services, the $498m on planning and $750m on temporary staff included in the headline total.

The problem is excessive use of consultants full stop, which damages morale in public-sector agencies. What are the 2061 staff in the Prime Minister’s Department there for if not to advise? The 6512 staff in the departments of health and education don’t run schools or hospitals. Whatever the cause of the consultant and temporary worker surge, government must be more transparent about why and what is being spent on whom. The figures revealed today aren’t timely, clear or granular enough.

Spending has reached such a height that statistics on the size of the bureaucracy are becoming meaningless. Even if the average spent on this phantom public sector were $250,000 per person, that’s the equivalent of another 38,800 people in effect working for the federal government. Economic rather than legal status is a better guide to the nature of work and employment.