This is how the media is used to cover-up rampant corruption (for its own $$) and why we're in such a dire state.
These same forces, in almost identical style and tone, spent years arguing against a banking royal commission (for $$)... Skin crawl.How Chalmers should manage his consulting challenge
Treasurer Jim Chalmers deftly shelved recommendations made by the Reserve Bank review. He now needs to show the same pragmatism when it comes to consultants.
Karen MaleyColumnistMuch to the relief of the business community, Treasurer Jim Chalmers is finally showing signs of becoming a shrewder and more sophisticated political player.
Business leaders have admired the way the Treasurer adroitly recovered after his initial mistake of backing an external review of the Reserve Bank, which came up with the ill-conceived idea of setting up a separate interest rate setting board, chock-full of monetary policy experts.
After a year in the job, Treasurer Jim Chalmers is showing greater pragmatism Australian Financial Review
Chalmers, however, was savvy enough to recognise the danger of allowing the country’s interest rates to be dictated by a bunch of academic economists.
Indeed, it’s extremely unlikely that either of Chalmers’ first two appointments to the Reserve Bank board – Iain Ross and Elana Rubin – would ever claim to be monetary policy experts.
But they are precisely the sort of people one would expect a Labor Treasurer to appoint to the RBA board. As a result, the practice of the past six decades – whereby both sides of politics appoint people that they approve of to the RBA board – will continue.
Similarly, Chalmers has shrugged off the review’s trenchant criticism of the RBA’s culture and appointed Michele Bullock – the RBA deputy governor who has spent her entire working life at the central bank – as the governor.
That means that despite Chalmers declaring his fulsome support for the review’s recommendations, the only significant change from the whole review process has been a reduction in the number of RBA board meetings to eight times a year, down from 11.
Having deftly shelved the review of the RBA, Chalmers now needs to turn around and apply the same pragmatism to the thorny issue of consultants.
There’s no doubt that the PwC tax scandal has fuelled a backlash against the big four accounting firms, with calls for them to be split up, and for a royal commission to be set up to probe the industry.
Chalmers should stare down these calls. Instead, he should establish a public sector taskforce to examine what’s driving Canberra’s excessive dependency on external consultants which costs taxpayers billions of dollars each year, and how best to address the problem.
The taskforce will likely discover when they’ve engaged consultants to advise on a particular project, public servants have had the same experience to many in the business community.
Consultants are always highly motivated to come up with a solution that requires the use of even more consultants, which means that the cost of a consulting project invariably balloons.
Because it is not in the interests of consultants to help their clients – whether it’s a government department or a company – to develop their own inhouse expertise, this leads to a vicious circle.
Cutting budgets
Government departments – or companies – decide they lack the appropriate expertise, so they engage a consultant. But because their employees are never given the opportunity to develop the requisite skills, the government department, or company, is effectively forced to keep using consultants.
So far, Chalmers’ response has been to whittle back the use of consultants by cutting departmental budgets, in a move aimed at shaving $3 billion off outsourcing costs over the four years to 2026-27.
But imposing arbitrary cost-cutting measures is a blunt tool with which to attack the problem of the public service’s over-reliance on consultants.
It will force government departments to get rid of the low-hanging fruit, but without addressing the fundamental problem of what is driving the excessive use of consultants. What’s more, it will be difficult for the public service to quickly replace the expertise that consulting firms are presently providing.
If Chalmers is serious about reducing Canberra’s over-reliance on consultants, he needs to set up a taskforce to examine how the public service can operate effectively without being forced to spend so much on consultants.
The taskforce should also be asked to come up with a long-term program for rebuilding public service expertise, including possible changes to public sector pay scales. After all, it’s unrealistic to expect that it will be possible to replace a McKinsey consultant with someone who is earning $120,000 a year.
Above all, Chalmers has to turn a deaf ear to calls to set up a royal commission.
Because, in essence, the royal commission is the ultimate example of the consulting model where an external expert is shipped in to recommend changes, rather than developing inhouse expertise.
Instead, Chalmers should start as he means to continue, by setting up a public sector taskforce to examine what’s behind over-use of consultants and how best to solve the problem.