NSW to cut consultant spending and boost in-house capability

Last Thursday (18 September), the NSW Labor government said it would crack down on the use of external consultants to carry out government work and place new expectations for agencies to deliver essential services in-house under its new Core Work Policy.

NSW Minister for Domestic Manufacturing and Government Procurement, Courtney Houssos, said the policy aimed to reduce over-reliance on external consultants and boost the capacity of the public service.

“This policy is about putting the public back in public service. It ensures that core work is led by accountable, experienced public servants, not handed off to consultants or private contractors,” she said.

“We are ending the overreliance on consultants, safeguarding institutional knowledge, and ensuring taxpayer money is spent wisely.”

Under the policy, agencies would be required to prioritise in-house delivery of “essential” government functions, with external support only to be considered as a last resort.

Agencies would be expected to deliver core functions internally, including the development of legislation and regulation, cabinet submissions and advice to ministers, policy development, analysis and recommendations and grant administration program design, administration and management.

The new rules also stipulated that external service providers could only be engaged in limited, clearly defined circumstances such as temporary surge capacity, independent audits and specialist capabilities essential for cultural safety, including work involving First Nations communities.

Under the policy, government agencies would also be encouraged to utilise the expertise of universities, community organisations and civil society when independent advice was required, instead of defaulting to for-profit consulting firms for such advice.

The NSW government said the Core Work Policy would boost scrutiny and accountability regarding the external procurement policy.

“The policy represents a major change in how government work is delivered, aiming to restore public trust and ensure that critical services are led by accountable, experienced public servants, rather than for-profit consulting firms,” it said in a release.

The Minns government said it had been elected with a “clear mandate to reduce wasteful spending” and added that it hoped to rebuild internal capability.

It reaped over $450 million in savings on external consultants in 2023–24, a trend the Minns government hoped would continue under the policy shift.

“This policy equips our public service to not just respond to today’s challenges, but to plan, lead and deliver the long-term priorities of the state,” Minister Houssos said.