Using up your budget in June? The public accounts committee is watching

By David Donaldson

Tuesday January 23, 2018

The rush to spend the budget before the end of the financial year is one of government’s worst kept secrets, and now a parliamentary inquiry is looking into this and a range of other questionable public service practices.

Commonwealth short-term contracts spike in June, the Australian National Audit Office found in its report released in December.

There are also a suspiciously large number of contracts that come in just below the $80,000 threshold at which procurement must be taken to market. The auditor found thousands of examples of multiple contracts being inked below the threshold with the same supplier and for the same time period, suggesting agencies are splitting contracts to avoid having to go to tender.

Short term contracts in the public service peak just before the end of the financial year. Source: ANAO.

The parliamentary Joint Committee of Public Accounts and Audit will be taking submissions until 16 February on the use of contracts and consultants in the public sector.

A former public servant himself, the committee’s deputy chair Julian Hill MP has long been concerned about the impact of headcount caps, which frequently lead to a spike in contractors and consultants. The National Disability Insurance Agency, charged with delivering the NDIS, has found it difficult to do its job thanks to the “totally unrealistic” staffing cap put in place by then-prime minister Tony Abbott, he argues.

“I know anecdotally and from my own experience in the public sector that the use of on-hire labour is often driven by a fetish of headcount,” Hill told The Mandarin.

“Central agencies say ‘oh, we’ll put this limit in’ and then you go to your secretary and say, ‘I actually can’t live with that because I need to do this work’, and they say, ‘just employ them as contractors to get around the headcount.'”

Even if you know it’ll end up costing more, you’ll often be told: “don’t worry about that, it’s all we can do”.

“There’s a real question of are we actually wasting public money by employing people for five years on a labour hire contract who simply should be public servants. Because if we’re wasting public money to get no better outcome, then why don’t we just employ some public servants at a lower cost?” Hill argues.

There are an unusually high number of contracts written just below the $80,000 threshold at which stricter rules take effect. Source: ANAO.

He, like many others, also believes consulting firms are being used inappropriately. Often consulting firms can bring in innovation and insights from other jurisdictions, and can be a great asset if managed well. But in many cases the government gets little more value than a “report at the end”.

Seeing agencies buying the same services for different prices — something he saw while working in the Victorian government — adds to the suspicion that some aren’t attaining value for the public’s money.

Hill hopes the committee will be able to work with the consulting firms and others to work how government can squeeze better value out of them.

Then there’s the question of long-term public sector capability.

“If you read the retirement speeches of senior secretaries, it’s kind of like their coming out speech, where you get a sense of what they really think. There’s been a theme in just about every one of them that there’s been a degradation of policy capability because of an overuse of consultants,” he says.

“You expect your public servants to remember what happened in a royal commission in 1929, because that’s been handed down. And when the government’s come up with a perhaps crazy idea of how to reorganise things or build a new road, you want some senior public servants who can say ‘we tried that 40 years ago, it’s probably not a good idea, and here’s why’.

“You degrade that capability, or trash it, at your peril. I don’t think big chops and changes, constant machinery of government changes, and paying the brightest people to go away [through redundancies] is really a smart way to manage the public service.”

Public discourse often latches onto small but symbolic examples of misspent funds such as politicians’ travel expenses and dodgy grants. While such attention is important, it means the much greater sums lost through the more boring topic of poor management usually fails to gain impetus.

“We’re talking enormous amounts of money. Billions and billions of public money a year,” says Hill.

“I’ve learned from my time managing lots of areas in many different portfolios that the public service, particularly the policy strategic capability, is an asset for the public that’s been built up over generations and it should be stewarded as an asset.”

The committee has approached former secretaries and other “people with a view” for their thoughts.

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