Unis, governments create boom in spending on consultants

There is a boom in spending on consultants, which is growing nationally at the fastest pace in five years, a new report finds.

Dean Smith says the use of consultants had to be properly assessed.

University efforts to lure foreign students, and the financial services royal commission, have ­fuelled a boom in spending on consultants, which is growing nationally at the fastest pace in five years, according to a new report.

Governments in Australia spent $US908 million on consultants last year, up 7.5 per cent from 2016, and the consulting sector is expecting 8 per cent further growth this year.

“2018 is proving to be another very solid year of demand for public sector consultants,” the new report, written by Source Global Research, found.

Financial services firms, under pressure to improve their processes after revelations at the royal commission, increased spending to $US1.23 billion.

The total consulting market — more than half of which arises from financial services, public sector and energy and resource firms — rose 7.1 per cent to just over $US5bn, after a 5.2 per cent increase the previous year. More than a third of the total was spent on digital services. “Digitisation is the key driver in Australia’s consulting market, with clients turning to consultants for advice on customer service and experience, while demand for organisation-wide transformation is also spreading quickly,” said Source director BJ Richards.

Publicly funded universities were engaging consultants to “draw in greater numbers of foreign students to boost revenues”, the report found.

The royal commission was poised to “drive more work” for consultants, the report found. “It has already unearthed some unsavoury practices that will need to be regulated out,” it said.

In January, parliament’s joint committee on public accounts ordered an inquiry into federal government spending on consultants, which is yet to report. Committee chairman Dean Smith said yesterday the use of consultants had to be properly assessed. “The effective use of consultants must strike a fine balance between delivering value for money for taxpayers while at the same time building an efficient and professional public service,” he said.

Labor MP and committee deputy chair Julian Hill said: “It’s no surprise that yet again there’s been significant growth in lucrative consulting to government. The inquiry has unearthed enormous concern around outsourcing, lack of transparency and value for money.”

PwC’s Liza Maimone said: “The government and public sector consulting market has been growing at a good pace for several years now, but it now seems to have normalised.”