Victorian public service spending on consultants, contractors balloons

Victoria’s Auditor-General has also highlighted concerns over transparency, in his second damning report in as many weeks.

The total Victorian public service spend on contractors and consultants increased by 47 per cent between 2018-19 and 2021-22. Picture: NCA NewsWire / David Crosling

Victorian government departments spent more than half a billion dollars on consultants between 2018-19 and 2021-22, with the total public service spend on contractors and consultants increasing by 47 per cent over the period.

The spending, highlighted in a Victorian Auditor-General’s report tabled in state parliament on Wednesday, came despite the Labor government promising ahead of the 2018 election to reduce departmental spending on contractors and consultants.

The report follows damning findings last week by Auditor-General Andrew Greaves, who warned in a separate probe that Victoria’s total gross debt will spiral to $256 billion by June 30, 2027.

In Wednesday’s report, the Auditor-General has also criticised the government for a lack of transparency, concluding that the government did not publicly report against the targets it set to reduce the expenditure.

The report found that between 2018-19 and 2021-22, Victorian government departments spent $561 million on consultants, and reported spending $11.1 billion on contractors.

Of the $561m spent on consultants, $320m, or 57 per cent, was spent with five consulting firms.

“Government departments are not required to, and do not consistently, record, monitor or comprehensively report on their contractor and consultant expenditure,” the Auditor-General concluded.

“This results in a lack of transparency.”

The Auditor-General found departments’ levels of compliance with disclosure requirements varied, “and some departments do not publish all the information they should”, and that spending data for Victoria’s Health Department was “not reliable due to a lack of rigour around record keeping and controls.”

Spending across the public service on contractors and consultants increased by 47 per cent, from $2.8bn in 2018-19 to $4.2bn in 2021-22.

This was despite goals set by the government ahead of the 2018 election which aimed to cut spending on consultants and contractors by $114.5m over the three years.

Then premier Daniel Andrews and deputy premier (now Premier) Jacinta Allan at the Victorian Labor Party conference in June. Picture: NCA NewsWire / David Crosling

The report noted that the period did coincide with the Black Summer bushfires and Covid pandemic.

The Auditor-General’s office said they expected government departments to publish comprehensive information on their spending on contractors and consultants.

“However, currently departments only publish data on consultants (not contractors) and there is no easy way to view

total spending across the public service or to compare spending over time,” the Auditor-General found.

“The public can obtain information on contractors through an FoI (Freedom of Information) request, but to gain a complete picture they would need to submit an individual request to every department. This is an inefficient way of comparing and understanding spending over time, and ultimately limits public transparency.”

The Auditor-General recommended all departments monitor their contractor and consultant spending, review how they report it to ensure they comply with reporting requirements, and review how they categorise transactions to ensure they accurately report their spending.

It was also recommended that the Department of Health improve its documentations procedures for recording spending, and that the Department of Treasury and finance assess whether requiring departments to include both contractor and consultant spend in their annual reports would transparency on government spending.

Opposition finance spokeswoman Jess Wilson said the Allan government could not manage money, “as demonstrated by a staggering 47 per cent increase in spending on contractors and consultants.”

“On top of the dramatic increase in consultants, Labor has also grown the size of the public sector — all whilst outcomes across vital government services including health, roads, education and child protection continue to worsen.”

An Allan government spokesman said: “The use of consultants increased as Victoria dealt with major bushfires, floods and the global pandemic.”

“We are reducing our spending on consultants - as we promised during the election campaign. Further measures to reduce spending were detailed in the Budget.”