Australia’s universities are spending an estimated $1.8 billion annually on external consultants and contractors, yet they remain opaque about which firms they are working with or what the money is being used for. This lack of transparency has raised concerns about potential waste and the influence of consultancy firms on university decision-making.
Corrine Cortese, a professor of accounting at the University of Wollongong, conducted an analysis of the annual reports of 38 Australian universities for a Four Corners investigation. Her findings revealed that the total amount spent on external consultants was shocking, even to her and her colleagues.
“It did shock me, and it shocked my colleagues too,” said Professor Cortese. “As I was going through each individual one, I was like, ‘That can’t be right.’ Then by the time I got to the end, I couldn’t quite believe the total amount.”
A year-long Senate inquiry into university governance has highlighted the increasing corporatisation of Australian universities and their growing reliance on external consultancy firms for professional services and advice.
Labor senator Tony Sheldon, who initiated the inquiry, described the $1.8 billion figure as “shockingly high.” He argued that this money, which comes from taxpayers, should be directed toward improving student services rather than being spent on questionable consultancy work.
Professor Cortese pointed out that the lack of clear definitions regarding consulting engagements makes it difficult to track how much of the funds go to individual contractors or large consultancy firms. This lack of transparency has led to calls for greater accountability in university spending.
Federal Education Minister Jason Clare expressed concern over the findings, stating that the inability to break down the figures is also troubling. He emphasized that the public has a right to know who the consultants are, what they are doing, and why the money is being spent.
Luke Sheehy, CEO of Universities Australia, defended the use of consultants, arguing that universities need expert advice on matters such as occupational health and safety and cybersecurity. He stated that these expenses are appropriate given the complexity of university operations.
The Albanese government has pledged to introduce new governance principles that would require universities to disclose consultancy spending, its purpose, and its value. However, the issue remains contentious, particularly when it comes to the quality of advice provided by consultancy firms.
At the University of Technology Sydney (UTS), the use of external consultants has sparked controversy. When UTS sought to reduce debt and balance its budget, it turned to KPMG, which charged around $7 million for what some academics called “cookie-cutter” advice. KPMG staff were embedded within the university, accessing internal systems and attending meetings.
Former KPMG partner Brendan Lyon, now a professor at the University of Wollongong, criticized the firm’s approach, suggesting that consultants often seek to dominate their clients. He noted that the education sector was a key growth area for KPMG, with former university vice-chancellors joining the firm.
UTS staff had to use a freedom of information request to access the KPMG report, which was heavily redacted. The document, which was only available under strict supervision, was criticized for lacking the depth and rigor expected for such critical decisions.
KPMG declined to comment, but its national education sector leader, Chris Matthews, stated that the firm’s work focused on financial sustainability. He emphasized that decisions about staffing and academic structures remained with UTS leadership.
UTS eventually cut $85 million from its annual budget, resulting in the loss of 143 courses, 839 subjects, and over 120 academic staff. The university attributed the cuts to financial pressures, including the impact of the pandemic and changes in international student policies.
Consultants have also gained significant influence within university governance structures. Professor Cortese found that many university councils included former or current consultants from major firms. Senator Sheldon suggested that this was not coincidental, pointing to a pattern of consultancy firms infiltrating governing boards.
One example involved John Dewar, a former vice-chancellor at La Trobe University, who was appointed interim vice-chancellor at the University of Wollongong while still working for KordaMentha. Shortly after his appointment, KordaMentha was invited to submit a tender for a review of the university’s operations, winning $3.8 million in contracts.
Fiona Probyn-Rapsey, a union delegate at the university, criticized the arrangement, arguing that it undermined the integrity of the decision-making process. The university claimed it had a conflict management plan in place, but critics remain unconvinced.
There are also concerns about the data used by consultancy firms to inform their recommendations. KordaMentha’s report on the University of Wollongong acknowledged that workforce data was unreliable, yet the firm still recommended significant cuts. Similar issues were reported at UTS, where flawed data was used to assess course viability.
Academics argue that the reliance on poor-quality data leads to unjustified job losses and restructuring. They emphasize that the principle of “garbage in, garbage out” applies here, with flawed data being used to justify decisions that affect their livelihoods.
The debate over consultancy spending in Australian universities continues, with calls for greater transparency and accountability. As the sector faces ongoing financial challenges, the role of external consultants remains a topic of intense scrutiny.
