About $1bn spent on consultants over five years by the New South Wales government will be examined when a parliamentary inquiry begins on Thursday, with the public sector union set to lash the Coalition, which it claims left workers “demoralised and decimated”.
A submission from the Public Service Association of NSW (PSA), seen by Guardian Australia and to be handed to the inquiry, also accused the government of pursuing an operating model that devalued public servants and cost the public with “slavish obsession”.
The inquiry will first hear from the state’s auditor general, Margaret Crawford, who in March found the government had spent about $1bn on consultants between 2017 and 2022.
Crawford found that “agencies do not procure and manage consultants effectively” and “most agencies do not have a strategic approach to using consultants, or systems for managing or evaluating their performance”.
It was also revealed that more than 25% of consultancy fees were concentrated with the big four firms, including the embattled PricewaterhouseCoopers.
Crawford recommended the government create a system that captures all of the information about the use of consultants.
The inquiry’s chair, the Greens MP Abigail Boyd, said Crawford’s report helped to partially explain why the state had an “infantilised public sector that is now not capable of doing a lot of the core functions of government”.
Boyd will use the inquiry to understand how NSW became so reliant on the private sector, the impact that has had and how to rebuild the public sector.
“I’m particularly interested in investigating exactly how far these enormous private consulting firms have burrowed into the machinery of government,” she said.
While Boyd had no evidence of the type of activity uncovered federally with PwC, she was concerned about controls over what consultants are allowed to see and store.
“It seems on the face of it that there are very little controls in place when it comes to the use of information by consultants when they’re embedded within our government departments,” Boyd said.
“It seems to be that there are no real controls around the type of information that then not only resides in those people’s heads … but in terms of very basic document confidentiality protocols.”
The inquiry will also seek to hear from consultancy firms and department heads, as well as former ministers in coming months.
In its submission, the PSA will tell the inquiry the public service had been hollowed out and there was an overreliance on private-sector management consultants to provide politically and ideologically acceptable options to ministers.
“The public sector has been both demoralised and decimated by a slavish obsession with an ideological model which undermines and demonises both the public service and those employed within it,” the draft PSA submission reads.
“Simply put, public service has been devalued in NSW – with capability, competence and capacity continually stripped out.
“The ongoing use of consultants to externalise both core public policy provision and service delivery has benefited the few at the cost of all citizens in NSW.”
It added: “The idea of ‘free and frank advice’ which supposedly epitomises Westminster style government has been, at best, devalued as senior public servants seek ‘friendly’ consultants to support the advice ministers want to hear.”
The PSA will argue the sector needs to be “rebuilt from the ground up” and the government should restore funding for permanent roles andreview decisions involving consultants where possible.
The NSW finance minister, Courtney Houssos, said the government was committed to overhauling rules on the hiring of consultants. It would also reduce spending on consultants and labour hire workers, she said.
“We hope the findings of this inquiry will help ensure better standards in the administration of consultants. It will inform our comprehensive expenditure review which is identifying savings, including on the government’s consultancy spend,” Houssos said.
The government has announced it is considering introducing fines for the unlawful disclose of sensitive or confidential information.
