The Guardian • Issue #2066

Privatisation of government

Photo: AS – (CC BY 2.0).

The PwC/Tax Office scandal has brought to the fore some of the serious issues that arise when government functions are contracted out to the private, for-profit sector. We are witnessing a corporate take-over of government, a privatisation of government and its functions. The Australian Public Service (APS) has been gutted, service provision has deteriorated to new lows, and the morale of its workforce is rock bottom.

While the process has been underway since the Howard government, it really took off when the Abbott government culled 15,000 public servants and placed a cap on the number of APS employees. This was not a cost-cutting measure, but a pretext to outsource public service work. This came at a huge cost to the public purse, and a social cost to those who rely on public services.

The public service and its agencies have been infiltrated by parasitic, profiteering private firms that exert considerable influence over government. This has been achieved through contracting out public sector operations and functions, and personnel seconded from the private sector being embedded within the public sector.

“We find big consultant partners peppered across government departments. They’re in the senior leadership teams, in agriculture, in the Federal Police, in finance, they’re auditors internally for a wide range of government departments. So they’re everywhere and they’re really big, sitting alongside some of the largest corporations in the country,” Greens Senator Barbara Pocock told the ABC’s Four Corners.

Pocock pointed to their lack of accountability. “They’re not exposed to [Senate] estimates, they aren’t exposed to questions on notice, unless they’re inside an inquiry and affected by an inquiry. So, a whole lot of the key transparency devices and tools for our parliament are prevented from really looking at the big spend on consultants …”

“It has certainly undermined democracy,” Pocock said. “And you have to ask, is one of the intentions of moving so much of the government spend outside the public view […] a deliberate strategy to give certain governments cover for what they want to do.”

“Well I really think the Australian taxpayer has been ripped off and it’s unethical!”


There is a constant rotation of staff from the Big Four and other corporations in and out of the public sector or Parliament and parliamentary offices. The movement is in all directions. (See Revolving doors of greed for examples.)

“The upper echelons of the Tax Office are stacked with former consultants. Amazingly, two of them, whose salaries are paid by us taxpayers are also still receiving payments from their former employers.” Four Corners reporter Angus Grigg said.

Defence is KPMG’s largest public sector client, providing more than two-thirds of its government business, worth $1.3 billion over the last five years. In the same period almost 100 former Defence staff have moved to KPMG! Needless to say, they bring with them valuable inside information and contacts that make for cosy relationships.

Over the past four years the Big Four consulting/accountancy firms – KPMG, PwC, Deloitte, and Ernst and Young – raked in a combined $4 billion in federal government contracts. Because of their partnership structures there is no public access to just how profitable the contracts were.


At times it is hard to distinguish public from private. These parasites sit on government advisory boards, draft policy as well as deliver “public services” on behalf of the government.

As we saw in the case of PwC which was advising the Tax Office on curbing tax avoidance at the same time as advising its clients on how to avoid taxes, conflicts of interest arise. The response of such corporations is that they have “checks and balances” in place to address any such conflicts!

At the same time as working for government departments they also hold powerful positions on numerous corporate boards. The Big Four accounting/consultancy monopolies audit the books of 97 per cent of the top 300 corporations listed on the stock exchange. Power comes with that inside knowledge of government departments and corporations that can be used for financial gains.

The Big Four donated similar amounts to Labor and Liberal over the past ten years with their combined total averaging $400,000 per annum from 2012-13 to 2016-17. Since then, it has been closer to $500,000. That’s the the donations on the public record. There may well be others.

This is a small down payment for such large and lucrative contracts that make it worthwhile for the major parties when in office to offer them contracts.

The Big Four have become so powerful that the government is dependent on them. At the same time any semblance of an independent public service has long vanished. These consultancies know the importance of telling the government what it wants to hear and, according to the Auditor General and whistle blowers, some of their auditing falls far short of ethical standards. As the saying goes, don’t bite the hand that feeds you.


The public service is a shell of its former self. It has lost institutional knowledge and capability.

The sorts of services contracted out include policy advice, labour hire, travel management, recruitment, transcription, IT,  auditing, property rental and management, legal services, project management, employment.

All this work was once done by the public sector, without the additional cost of corporate profits.

The contracting out of billions of dollars of work that was once done by the public sector and could and should be done by them, usurps the power of government, public accountability and democratic processes.

The processes are opaque, with no public accountability, and the services far more costly than if provided by the public service which is not driven by the profit motive.


Labor made a commitment to restore the APS and reduce outsourcing. It  has introduced an amendment to the Public Service Act to reform the APS. The bill tinkers at the edges and will achieve little if anything.

The Albanese government has committed to reducing spending on consultants and contractors by $3 billion over the next four years. It’s a start. There is no mention of clearing private interests out of the APS ranks, or the extent to which staffing will be increased.

The failure so far of the APS to offer its workforce a decent wage rise to make up for past wage caps – let alone catch up with inflation – is not a good sign.

According to Griggs “This is not about a few consultants behaving badly. It’s about the systematic replacement of a once fearless public service with voracious private sector operators, driven not by public good but by profit. The question is … is it too late to fix it?”

The answer to that question is “No.” But it will take political will and courage. Labor hasn’t shown much of either quality.

It’s time to put the public and service back into public service.

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