Spending on external consultants by the Australian Public Service has experienced a significant surge, reaching $756 million during the 2024-25 financial year despite the Albanese government's commitment to reduce reliance on outside advisors and strengthen internal capabilities.
Sharp Increase in Consultant Expenditure
New analysis of federal tender data reveals that APS-wide spending on consultants jumped by approximately $135 million compared to the previous year. The figures, compiled by The Canberra Times through examination of AusTender data, show a clear upward trend in external consulting contracts despite government promises to curb such expenditure.
Opposition finance spokesperson James Paterson immediately seized on the numbers to criticise the government's performance. "Consulting expenditure under Labor is as high as ever," Senator Paterson declared. "Labor has said for years they need to increase the number of public servants so they can reduce the costs of consultants."
Broader Temporary Personnel Spending Remains High
The analysis extended beyond traditional consulting firms to include a wider range of temporary personnel services. Contracts awarded to labour hire firms, contractors and various consultancies increased by $70 million to reach $2.33 billion in 2024-25.
This substantial spending on external labour has remained consistently above $2.2 billion annually since Labor took office, approaching the peak of $2.4 billion recorded under the Coalition government in 2021-22.
ACT independent senator David Pocock expressed concern about the implications of sustained high spending on temporary personnel. "The consistently high spending on temporary personnel is a sign that core capacity is being hollowed out rather than strengthened," Senator Pocock observed.
Government Defends Its Record
Finance and Public Service Minister Katy Gallagher faces pressure to explain the rising consultant costs after Senator Paterson called on her to "front up and explain why the Albanese government is increasing spending on consultants when they promised the opposite."
Minister Gallagher defended the government's approach, highlighting the poor state of the public service inherited from the previous administration. "The public service was in terrible shape when we came to government," she stated on Tuesday. "It had been contracted out. We have turned that around in the first term by employing permanent public service jobs and reducing the use of consultants and contractors."
Treasurer Jim Chalmers echoed this position, telling reporters in Canberra that the government had "worked very hard to turn external contractors into public servants, because you get more value for money that way." Dr Chalmers emphasised that "that work is ongoing."
Union Calls for Focus on Insourcing
The Community and Public Sector Union has warned against arbitrary budget cuts and urged the government to prioritise reducing outsourcing instead. This follows the Finance Department's recent directive to agency heads to find savings of up to 5 percent.
"Arbitrary cuts inevitably result in job losses," the CPSU cautioned, while National Secretary Melissa Donnelly insisted that "the job of addressing the use of contractors and consultants to do core public sector work is far from complete."
Donnelly highlighted the potential for substantial savings through insourcing public sector work, stating "there is significantly more to do" and "this is where government must direct its attention."
The government maintains that since taking office in 2022, it has achieved $5.3 billion in savings on non-wage APS expenses including consultants, labour hire, travel and hospitality. A further $6.4 billion in savings has been promised over the four years commencing 1 July 2025.
To deliver on these commitments, agency heads were directed earlier this year to cut $800 million from their collective 2025-26 budgets. Since 2023, agencies have operated under the government's strategic commissioning framework, which directs them to reduce external labour use and bring core APS work in-house.
