The New South Wales government will suspend the embattled consultancy firm PricewaterhouseCoopers from working on tax projects as it emerged that the state’s health districts spent at least $124m on consultants since 2011.
The temporary ban will be announced on Thursday, when a state parliamentary inquiry into the public sector’s use of consultants will begin, and follows revelations that PwC misused confidential federal government information for commercial gain.
The NSW finance minister, Courtney Houssos, will promise the government would “toughen our regime” against bad actors.
The state’s auditor general, Margaret Crawford, will appear before the inquiry on Thursday after publishing a report in March that found the government had spent around $1bn on consultants between 2017 and 2022.
Spending on consultants within the state’s local health districts, totalling at least $124m over 12 years, will also be an initial focus of the inquiry.
In her report, Crawford noted local health districts were not required to produce annual reports and the department did not include their consulting expenditure in its annual report.
She estimated about $89m on consultants had been spent in the five years to 2022.
“There is no legislative requirement for local health districts and some other entities in the health cluster, besides the ministry of health, to publish individual annual reports,” the report read.
“As a result, itemised spending and other information on the use of consultants, estimated at over $89 million over the five-year period, are not included in any public reporting.”
Using data from annual reports, Guardian Australia can reveal local health districts spent even more than Crawford outlined.
Audit reports from each of the districts reveal a spend of at least $124m since 2011, with at least four of the areas spending more than $10m each.
The inquiry’s chair, Abigail Boyd, said there were serious questions about the way the districts were set up and why they were not subject to stricter reporting requirements.
“There seems to be a lot of consultants who have worked in or are still working across those boards but also within NSW Health,” she said.
“It raises questions … as to what’s going on in those local health districts and whether that is actually a good use of public money.”
In 2011, the government and department reconfigured the state’s health service with the addition of local districts. Multiple consultancy firms were commissioned to advise the department on how it should restructure, and that advice is now cabinet in confidence and restricted.
The government established 15 districts – eight for metropolitan areas and seven in rural and regional locations.
The health minister, Ryan Park, said the focus of a separate, yet-to-be-established commission of inquiry into health system funding was “about ensuring we spend precious taxpayer dollars where they are needed so that we can deliver the essential health services our community needs”.
Consultants were employed after considerations of “cost, quality, capability and capacity”, according to a department spokesperson.
“NSW Health uses consultants strategically in a way that delivers value for money and supports the NSW public service,” the spokesperson said.
“NSW Health primarily uses consultants when they bring specialist expertise on matters that are outside the normal work of the organisation, or when they provide additional resources to augment the internal team to work on issues that are critical and time-sensitive.”
The frequent use of consultants by governments at all levels in Australia has come under scrutiny over the past week after it was revealed PwC used confidential Australian government tax information for commercial gain.
On the back of the revelations, the state government met with PwC to discuss their use of the firm. The government has been assured no one caught up in the controversy was involved in any work for the state government.
Alongside the temporary suspension of the firm from government tax work, the government will on Thursday announce a review of conflict of interest and confidentiality terms for all professional services engagements.
The health department has been contacted for comment.
