State government agencies have overspent on contractors and consultants by a quarter of a billion dollars.
The heavy reliance on outside consultants, particularly in transport agencies responsible for billion-dollar investment programs, has been regularly criticised by state auditors.
In its most recent report, the Audit Office of NSW found that agencies used outside consultants and or contracts on 82 per cent of major capital projects.
And once they did engage outside consultants, those agencies then overspent their initial allocation for contractors or consultants by $250 million, the audit office found.
“When project governance is lacking, there is a major risk of incurring additional unbudgeted costs,” the audit office said in its report on internal controls and governance, released this month.
The finding that consultants’ costs blew out by $250 million was immediately seized on as evidence of mismanagement by the opposition, which has been a persistent critic of the government’s consultancy spending. But it was defended by the state government partly on the basis that the spending was necessitated by its $41.5 billion transport and road infrastructure program.
“It would not be practical to retain all the people working on our infrastructure projects as permanent staff, given the temporary need for their expertise while planning and construction is underway,” a spokeswoman for Transport for NSW said.
The auditor general has previously highlighted large and growing spending on consultants. For instance, in its snapshot of transport agencies last year, the audit office found that eleven contractors had been engaged for more than six years, while eight were paid more than $400,000 a year.
The Transport for NSW spokeswoman said that in some instances the use of contractors was extended when later stages of projects were funded or approved, or “where the scope of the project with which they are involved has been expanded to deliver more benefits for the community”.
But acting opposition leader Michael Daley said the government was “failing miserably in its management of infrastructure projects”.
“A quarter of a billion dollar overspend on consultants and contractors, missing business cases and a failure to learn lessons from the past shows that this government is failing to competently manage infrastructure,” Mr Daley said.
Mr Daley pointed to the $550 million blowout in the cost of the CBD light rail line to $2.1 billion, and the increase in the cost of WestConnex from an initial estimate of $10 billion to $16.8 billion as evidence of the government’s profligacy.
The audit office’s findings were based on a sample of 97 infrastructure projects being delivered across the state, which were at least 50 per cent complete.
The audit office found that while 87 per cent of these major projects were supported by business cases, 32 per cent of those business cases were deficient.
Figures previously tabled in State Parliament this year showed state agencies ratcheting up their use of outside consultants, even as the government attempts to rein in public service costs.
For instance, in this year’s state budget, Treasurer Dominic Perrottet said the annual efficiency dividend, or budget cut, imposed on government departments would increase from 1.5 per cent to 2 per cent for three years from next financial year.
This story Administrator ready to work first appeared on Nanjing Night Net.