This inquiry came about as a direct response to the Auditor-General’s 2023 report entitled NSW Government agencies’ use of consultants. The Auditor-General found that, although NSW Government agencies had disclosed $1 billion in consultant engagements over the preceding 5 years, these agencies had not been procuring and managing consultants effectively, lacked a strategic approach to when and how consultants are used and failed to evaluate or assess consultant engagements for quality.

This report focuses on the NSW Government’s interactions with consultancy firms and, while specific in its examples, the themes addressed and the findings and recommendations can be seen as representative of the issues that are plaguing governments across Australia.

Key findings:

• The inability of the NSW Government to readily disclose the total amount it spends on consultants across agencies is of significant concern from a transparency and accountability perspective.
• The overuse of consultants by departments and agencies is due to a lack of senior managerial oversight in the public sector.
• NSW government agencies and consulting services have developed a 'tick and forget' culture when it comes to the management of conflicts of interest.
• There are no real consequences for breach of governance rules by either government agencies or consultants. This leads to frequent errors and results in questionable conduct going unchecked.

Key recommendations:

• The NSW Government should revise the definitions of a 'consultant' and a 'contractor' to ensure that the amount spent on consultants and contractors is separately disclosed and readily available.
• The NSW Government should prioritise the development of a single, authoritative data source capturing all government spending on consultants, including that of local health districts.
• The NSW Government should strengthen the requirements for agencies to conduct post-engagement evaluations to ensure that they are viewed as a compulsory component of substantial engagements of consultants. A report on the outcomes of these reviews should be supplied to NSW Procurement.