Every year VAGO assesses whether Victorian government departments are fairly presenting their service delivery performance in Budget Paper No. 3: Service Delivery (BP3). Departments develop this information using guidance provided by Victoria’s Resource Management Framework (RMF) and in consultation with the Department of Treasury and Finance (DTF).
Data on how much the public service spends on contractors and consultants is not always reliable. We sampled data from 3 departments and found one – DE – does not always correctly classify its spending; and another – DH – did not hold enough documentation to confirm the reliability of its data for the period we examined.
As a result, there is a risk that these departments' annual reports do not disclose the full amount they spent on consultants as required by Financial Reporting Direction 22.
There is no complete picture of how much public money departments are spending on contractors and consultants. This is because departments only need to publicly report their spending on consultants, and not contractors.
Financial Reporting Direction 22 outlines what departments need to report. However, the public does not have an easy way of knowing and comparing how much departments and the public service spends on contractors and consultants.
In 2018, the government made an election commitment to reduce spending on contractors and consultants. This was in response to its concerns about the Victorian Public Service relying too much on these services, and therefore losing internal skills and knowledge. Targets were introduced in 2 main categories – professional services and labour hire – to assist departments to reduce their spending.
Despite this commitment, overall public service spending on professional services increased between 2018 and 2022 while spending on labour hire decreased.
We made 5 recommendations to address 3 key issues. The relevant agencies have accepted our recommendations in full or in principle.