Consultants have been paid millions of dollars to help design federally funded grant schemes and assist in assessing applications to such programs, drawing bipartisan rebuke from MPs concerned about potential conflicts of interest.
The politicians and a union believe the assessment of grant applications is “core work” for public servants that should no longer be outsourced to private companies, in line with guidelines issued to departments in late October.
The Labor senator Deborah O’Neill, who is leading a parliamentary inquiry into the ethics of the consulting industry, said concerns about potential conflicts of interest were justified.
“I have had whistleblowers contact me to say that one part of a consultancy would write the terms of a grant application in a way that would be favourable to another part of their company,” O’Neill told Guardian Australia.
She did not name the firm to protect her source.
O’Neill said she had also received reports from confidential whistleblowers that young graduates employed by large consultancy companies were involved in making determinations about grants. She did not state which firms.
Publicly available documents showed that several firms were involved in assessing grant applications.
The Department of Health and Aged Care paid the consultancy giant EY $1.2m to assess aged care grants between August and October. The firm assessed grant applications that could see aged care providers reimbursed for costs incurred while responding to the pandemic.
“A total of 11,383 applications were submitted by aged care providers,” a department spokesperson said. “All applications have been assessed and are being processed for payment.”
Some of the contracts – including an almost $2m deal with PwC Australia to help assess grants – stretch back to at least 2020.
Last year the then deputy secretary of the federal industry department, Mary Wiley-Smith, told Senate estimates that PwC Australia was involved in “going through” program guidelines “and helping to develop them”.
“In some cases, they may be involved in some eligibility checking or under supervision doing some forms of assessment for some grants,” Wiley-Smith said.
Until 30 June the consultancy firm Synergy was paid more than $3m to help the industry department deliver several grant programs. The department has previously stated that Synergy, along with PwC Australia, was hired as part of surge workforce to help at busy periods.
Last month the finance minister, Katy Gallagher, outlined new guidance to departments, urging them to no longer use consultants for work deemed to be “core” to the public service. This included the drafting of cabinet submissions and regulations, leading policy development or occupying a role on an agency’s executive.
The Community and Public Sector Union’s deputy secretary, Beth Vincent-Pietsch, told the parliamentary inquiry that private companies should not be influencing how taxpayer money was assessed and awarded.
“This is core Australian public service work and it creates a potential for real and apparent conflict of interest where these consultancy firms could grant contracts to other clients – or at least provide internal knowledge of grants requirements – to tenders,” Beth Vincent-Pietsch told the inquiry this week.
“These conflicts of interests are made more serious because of the influence of these corporations now have over public policy. An overhaul is desperately needed.”
The Liberal senator Paul Scarr, who is a member of the inquiry led by O’Neill, was also critical of the contracts.
“For the life of me, I can’t understand why functions like preparing grant guidelines would ever be outsourced. I just don’t get it,” Scarr told the inquiry.
The health department told the parliamentary joint committee on corporations and financial services that it had processes in place to deal with conflicts of interest.
“The policy places a positive obligation on departmental employees, contractors, and consultants to disclose real and apparent conflicts of interest as they arise and to ensure any disclosed conflicts are actively managed,” the department’s submission to the inquiry said.
