Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Friday, 29 December 2017
The story in today’s The Australian on federal government spending on consultants is false and misleading.
Firstly, it massively overstates the total dollar value of consultancies in 2016-17, by including the full cost of multi-year contracts in that single year.
For example, the journalist erroneously included the full ten-year value of a $1.8 billion contract entered into in 2010, during the period of the Rudd-Gillard Labor Government, into the ‘nearly $10 billion’ 2016-17 figure because of a serious misinterpretation of AusTender reports which show the full value of each active contract in each financial year the contract continues to run. Using that data in this way is clearly wrong.
Using that same false and misleading methodology the cost of private contracts and consultants paid for by the federal government in 2013-14, Labor’s last Budget year in office, would have been over $15 billion - which it wasn’t.
Secondly, and even more importantly, the report in The Australian completely ignores the fact that the overall combined cost of federal government administration, including the use of contracted services, has fallen significantly under our Government and is projected to keep falling over the current forward estimates period.
This is clearly demonstrated in the graph below published on page 5 of Budget Paper 4 2017-18.
Indeed, comparing departmental expenses as a proportion of overall federal government expenditure on an apples-with-apples comparison basis, those expenses, including the cost of privately contracted services such as consultants, has fallen from a high of 8.5% in 2007-08 to 7% in 2016-17 and is projected to keep falling to just 5.6% by 2020-21.
Graph 1: Departmental Expenses as a percentage of total Government Expenses(a)
(a) Expense data from 2007-08 through to 2015-16 is derived from Consolidated Financial Statements (CFS). From 2016-17 onwards, expense data reflects revised budget and forward estimates as at 2017‑18 Budget.
Karen Wu - 0428 350 139