Consultants doing core public service work 'deeply problematic', says VPS commissioner

By David Donaldson

October 22, 2018

Consultants were on the agenda at this year’s IPAA national conference, with panellists pondering politicians’ lack of trust in public servants and the long-term implications of outsourcing strategic functions.

It’s “deeply problematic” that core public sector work is being outsourced to consultants, says Victorian Public Sector Commissioner Paul Grimes.

“If we do find ourselves in the business of outsourcing core policy work I think that really is deeply problematic,” he told last week’s IPAA national conference in Melbourne.

In his typically understated way, Grimes hinted that it was already happening.

“I’ve certainly experienced cases where there’s been perhaps a little less interest in the public service doing some of the strategic policy work than it might have done in the past, so I think there are examples of that,” he said.

“The question we always have to ask ourselves when we engage consultancies is: ‘Is the engagement adding value to our work, both in the short-term and in the long-term?’”

Grimes explained that Victoria does not have a VPS-wide systematic approach to consultants, and is currently asking “do we need to be thinking in more structured ways about our engagement of consultants right across the public sector?”

Consultants can of course be useful for plenty of things, but “the question we always have to ask ourselves when we engage consultancies is: ‘Is the engagement adding value to our work, both in the short-term and in the long-term?’” he said.

If the public service is giving out work that ought to be done internally it raises the longer term risk that “raises the fundamental question, are we investing enough in our core capabilities? Are we investing enough in training our staff? Are we making sure we have strong institutions?” he noted.

Some of the recent data is “suggestive that the answer is that we’re not doing enough across those fronts.”

“Cosy relationships” with certain companies and “the offering of contracts to favoured suppliers” are additional concerns.

“I think we’ve always got to be vigilant around those ethical concerns and potential conflicts of interest,” Grimes said.

“Having strong relationships, indeed strong personal relationships is a very, very important part of that, but we always need to be on our guard to make sure that we’re conducting those relationships in a way that can withstand scrutiny.”

New South Wales Public Service Commissioner Emma Hogan wants to ensure some of the consultants’ skills are rubbing off on public servants.

“What I look for, and we’re starting to look for now, is when we work with consultants how do they leave us better than they found us?” she said.

How do they pass that capability on? So it’s not a piece of work that’s launch and leave.”

Hogan also wants to harness the good work that’s happening in some parts of the public service so public servants can learn from each other, rather than just external figures.

Politicians’ lack of trust ‘crazy’

“There’s the risk if you’re outsourcing the meaty policy development work or strategic thinking that you will erode that capability in the department.

It’s “crazy” that so many ministers trust advice provided by consulting firms more than their own public servants, says the Grattan Institute’s Danielle Wood.

“That’s certainly a concern, if politicians are not trusting their department and they’re feeling the need to bring in advice that could be provided by the department because of the lack of trust. That’s a huge issue,” she told the conference.

“It concerns me if we can trust the PwC brand, and we can trust the EY brand, but we can’t trust the Department of Education or the Department of Treasury. That’s crazy. These are highly trained, highly skilled people and they should absolutely be trusted in the advice they’re providing.”

It’s commonly believed headcount caps on the public service are driving the growth of consultancies, but Wood said in the Grattan Institute’s research for its submission to the federal consultants inquiry they were unable to establish a link, due to inconsistencies in how consultancies are reported by agencies.

“When we went to look behind that, it became clear that really no-one has a clear idea of what’s going on,” she said.

For many, the brand gives a sheen of independence, though Wood thinks it’s strange that this would be the case.

“In a lot of cases, people seem to value the brand. Having a report by PwC or KPMG seems to hold some additional sway, and I think public servants are right to question why that is. Why is it that their own work doesn’t have the same amount of gravitas given that a lot of these consulting firms are actually staffed by ex-public servants?”

Indeed, noted Victorian Education Secretary Gill Callister, there was once a time when a “commercial organisation” would have seemed less independent than a government department, but that somewhere along the way that had gotten “mixed up”.

In the long term, giving the interesting work to consulting firms would lead to public sector brain drain, Wood added.

“It certainly seems that there’s the risk if you’re outsourcing the meaty policy development work or strategic thinking that you will erode that capability in the department,” she explained.

“The other risk I see is that you lose the best and brightest. Really smart people go into the public service not because of pay … historically it’s been because they’re passionate about the work, they like the intellectual challenge, and they like to feel like they’re making a difference.

“And if you leave those people doing nothing more than managing consulting contracts, they’re going to leave.”

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