Is the pandemic responsible for Victoria’s rising spend on consultancies?

The Victorian government’s spending on consultancies has soared by $49 million in just one financial year, annual report data shows.

While the government has linked the 39% increase in spending by major departments with the COVID-19 pandemic, critics say this only accounts for some of the rising spend.

Across Victoria’s eight departments and Victoria Police, the total spending on consultants rose from $126 million in 2019-20, to $175 million last financial year.

Every department had an increase in contract spending, except the Department of Premier and Cabinet, the Department of Education and Training, and Victoria Police.

The Department of Health had the biggest increase in spending, from $29.6 million to $47.7 million, closely followed by the Department of Treasury rising from $19.1 million to $39.8 million.

At the Department of Justice and Community Safety, spending on consultants jumped from $1.9 million to $11 million, and at the Department of Jobs Precincts and Regions spending rose from $23.4 million to $36.9 million.

A spokesperson for the Community and Public Sector Union Victoria branch said the departments used external consults to have “arms-length responsibility”.

“This just duplicates the responsibilities and why the government employs executives,” he said.

The Victorian government pointed to the  response to the pandemic and the state’s infrastructure projects as requiring consultants.

“The response to the global pandemic has increased the need for specialist skills to support work across government, which we anticipate will reduce going forward as we reopen, rebuild and deliver on our priorities,” a government spokesperson said.

“We’re investing at record levels to support the economic recovery and transform our state, through programs such as our Big Build and continued investment in hospitals and schools.”

The CPSU acknowledged some of the spending was due to these factors, but highlighted  “most of the pandemic spend was on direct employees or contractors and not consultants and that’s a completely separate spend”.

“The majority of the consultant spending is a contracting out of their thinking in policy and review work. This should be done in-house and would save millions of dollars and be available immediately,” the union’s spokesperson said.

The union is also pushing for Victoria’s public service commissioner Adam Fennessy to introduce a year ban on senior executives who leave the public service for the big consultancy firms to protect the corporate knowledge in departments and agencies.

The government is currently engaged in a process of attempting to reduce back-office costs and spending on consultants.

Alongside a rise in consultant spending, Victoria’s public sector workforce grew by about 18,400 people last financial year — the biggest increase nationally.

The increase saw the state’s total spending on wages increase from about $32.5 billion to $35.4 billion.

CPSU’s spokesperson acknowledged the VPS was growing alongside demand for services and population growth in past years.

“Direct employment is a far better cost-effective way of paying for this workforce expansion without the need for consultants,” they said.

This article was first published by The Mandarin.