New regulations require federal government agencies to report on consultant expenditure

Mathias Cormann

Finance Minister Mathias Cormann at Senate estimates hearings. Source: Mick Tsikas.

Finance Minister Mathias Cormann has approved new rules requiring federal government agencies to report annually on total spending on contracts and consultancies.

The rules, introduced as part of the government’s Tuesday budget, officially come into effect from the 2020-21 year onward.

Cormann said agencies must also report the amount spent on the largest contracts “to ensure consistency across all agencies”.

The Department of Finance would also establish a whole-of-government procurement panel for consultancy services to increase transparency through improved data and reporting.

The panel would help strike a “balance” between the government’s use of the permanent public service workforce and selective external expertise, Cormann noted.

“The government recognises that access to skills can come through training, recruitment and procurement,” he said.

“These different approaches all have their time and place to give the public the best possible support.

“The appropriate use of external specialists is an efficient way to bring in cutting-edge skills, technological advances and a wider diversity of views, at the best possible cost for taxpayers.

“Those partnerships with the private sector over recent years enabled the APS to respond with unprecedented agility during the bushfires and the COVID-19 pandemic.”

The mandatory panel would leverage the federal government’s buying power “to ensure best value when it engages with businesses”, and would consolidate a range of existing agency arrangements to provide a consistent framework and reduce administration and tendering efforts for industry.

“It is anticipated the first phase, for financial management advisory services, will commence by 1 July 2021, with the other phases for corporate and commercial services, operational by mid-2022,” Cormann said.

The budget papers noted that the new procurement reporting rules would ensure the public service can continue to be open and transparent in its operations, despite the budget also cutting funding from one of the government’s main transparency and accountability agencies, the Australian National Audit Office (ANAO).

Earlier this year, the ANAO found that the big four consultancy firms — Deloitte, Ernst & Young, KPMG and PwC — collectively make up $800 million a year in government contracts, with only 20% of that money spent on consulting.

This article was first published by The Mandarin.

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