The Victorian government has spent more than $670 million (US$451.7 million) on consultants over the past five years, paying a firm embroiled in a national tax scandal almost $80 million (US$54 million).
The state Auditor-General’s Office released the new collated figures as a federal Senate committee investigates the integrity of major consultancy firms after the leaking of confidential tax information shared with PricewaterhouseCoopers (PwC).
PwC, Klynveld Peat Marwick Goerdeler (KPMG), Ernst & Young, Deloitte and Boston Consulting Group ($362 million (US$244 million)) account for more than half of the $671 million (US$452.3 million) total spend from mid-2017 to mid-2022.
About $79.6 million (US$53.7 million) was paid to PwC over the five years, including $17.8 million (US$12 million) in the 2021/22 financial year.
Former PwC partner Peter Collins has been referred to federal police to investigate allegations he shared confidential government briefings on multinational tax reform with partners and clients.
Premier Daniel Andrews has repeatedly said the secretary of the Department of Premier and Cabinet sought assurances from PwC and was confident it hadn’t leaked confidential information from his government.
Victorian Greens MP Ellen Sandell said it was disturbing the state government refused to pause contracts with PwC, despite the federal finance department effectively banning the firm from winning new work.
“Given the recent tax leaks, Victorians should expect the government to act, not just rely on assurances from PwC, who clearly can’t be trusted right now,” Sandell said in a statement.
Almost all of the consultancy funds were spent by Victoria’s now-split Department of Health and Human Services ($146 million (US$98 million)), Department of Treasury and Finance ($135 million (US$91 million)), Department of Transport ($117 million (US$79 million)) and former Department of Jobs, Precincts and Regions ($108 million (US$73 million)).
Spending on consultants by the nine Victorian government departments rose from $109.9 million (US$74 million) in 2017/18 to $167.5 million (US$113 million) in 2021/22.
Opposition special minister of state David Davis suggested the true cost would be higher than the $671 million total as consultancy expenses under $10,000 (US$6740) were not counted.
“Taxpayers will scratch their heads and ask what we have got for nearly $700 million (US$472 million) of expenditure,” Davis said.
Before last year’s Victorian state election, the Andrews government promised to save $50 million (US$34 million) a year by cutting consulting and labour hire costs.
The state budget also targeted $2.1 billion (US$1.4 billion) in savings over four years by cutting up to 4000 public service workers, on top of scaling back the use of labour hire and consultancy firms.
In a statement, a Victorian government spokesman blamed the increased use of consultants on the COVID-19 pandemic as it sought specialised advice outside of the public service.
“Now that the worst of the pandemic is behind us we will reduce this spending as we promised during the election campaign and bolstered with further measures detailed in the budget,” the spokesman said.
