Media Release: NSW inquiry report signals an end to consultants’ vampiric drain on public sector

After a thorough and forensic inquiry process, the Greens chaired Public Accountability and Works Committee has today tabled its report into the NSW Government’s Use and Management of Consulting Services.

Through the course of the inquiry, which held 10 days of public hearings and heard from over 90 witnesses, issues of conflicts of interest, mismanagement of contracts, the erosion of public sector capacity and flawed procurement processes were made evident to the committee and public. The report makes 28 recommendations that go to the heart of accountability, trust and value for taxpayer money.

Quotes attributable to Abigail Boyd, Greens NSW MP and spokesperson for Treasury, Finance and Economy, and Chair of the Public Accountability and Works Committee: 

“For too long, highly paid consultants and consulting firms have enjoyed a rarified privilege and prestige in the consciousness of the public and government decision-makers. It’s time to bring that relationship back down to earth.

“The figures show that in the final five years of the previous Liberal-National government, 10,006 consultant contracts were issued, a rate of one engagement every hour for five years. This number still fails to include other outsourced and contracted labour performed by professional services companies, and demonstrates a catastrophically reckless waste of public money.

“What we have found is that NSW government agencies have demonstrated an undue and excessive reliance on the use of consulting firms. But responsibility for this dynamic cannot be placed at the feet of public servants - it has been cultivated by the big consulting firms, greedy for growth into an increasingly lucrative market for services to government, enabled by policy settings like labour expense caps and so called efficiency dividends imposed by a government ideologically hostile to the idea of a robust and empowered public sector.

“This report is a clarion call to the NSW Government to do much more to clamp down on the use of consultants, to ensure they are no longer doing core government work, to improve transparency and scrutiny of consulting contracts that are deemed unavoidable, and to ensure an uplift in public sector skills and expertise through a skills audit and transfer.

“Conflicts of interest have failed to be appropriately managed by either party, and what has been deemed not to constitute a conflict of interest by the consulting firms has clearly failed to pass the sniff test. That’s why we are recommending prohibiting consultants from providing consulting work to government in circumstances where they act as an auditor to or have a consulting client that could be affected by the results of the work being undertaken. The fact that these very basic stipulations need to be made now shows just how lax our previous conflict of interest management regime has been.

“What is evident is that, left to their own devices, the NSW government has proven incapable of managing the tensions inherent in the use of consultants. That’s why key recommendations from this report include additional reporting to both Houses of the NSW Parliament by NSW Procurement, require consulting firms to front up to future parliamentary inquiries into any matters they have been involved in, as well as require there be an inquiry by the Public Accountability and Works Committee into the whole of government’s use of consultants at least once every parliamentary term moving forward to ensure that reductions in the use of consultants are not temporary and that we never find ourselves in this situation again.

“We are also moving to crack down on the partnership structures of these firms that have allowed them to skirt scrutiny and accountability, as well as their tax obligations. By recommending that partnership distributions for the big consulting firms are considered eligible for payroll tax, and recommending the federal government examine imposing company tax obligations, we are sending a clear signal to the big consulting and accounting firms that it doesn’t matter what tricky corporate structure you have devised, your time being treated as a protected species has come to a close and it’s time to start paying tax like the rest of us.

“What is clear through this report and inquiry is that we have drained our public sector of agency, motivation, and experience, while chaining ourselves to costly private consultants. This creeping influence has resulted in a weakened public sector, and beyond merely reducing our contracting of external consultancies it will take some time to rectify this degradation of public sector capacity. This work must begin now.” Abigail Boyd said.

 

The final report can be read here.

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