Universities Drowning in Consultancy Fees: A $1.8 Billion Black Hole
Australian universities are spending an astonishing $1.8 billion annually on external consultants and contractors, yet the specifics of these engagements – including which firms are hired and how the funds are utilised – remain shrouded in secrecy. This opaque practice has drawn sharp criticism, with consultancies accused of pushing questionable advice that leads to course and job cuts, ultimately undermining the public good principles that universities are meant to uphold.
The eye-watering figure was unearthed by Professor Corrine Cortese, an accounting professor and associate dean at the University of Wollongong, who meticulously analysed the annual reports of 38 Australian universities. The sheer scale of the spending left her and her colleagues deeply concerned. “It did shock me, and it shocked my colleagues too,” Professor Cortese stated. “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.”
This revelation comes amidst a year-long Senate inquiry into university governance, which has highlighted a growing trend of corporatisation within these institutions and an increasing reliance on external firms for professional services and strategic advice. Senator Tony Sheldon, the chair and instigator of the inquiry, described the $1.8 billion figure as “shockingly high” and a misdirection of taxpayer funds. “That is money that’s coming out of the pocket of taxpayers and not going into better services for our students for the future,” he argued. Senator Sheldon also pointed to a significant lack of transparency, noting that universities have historically been unwilling to disclose the extent of their consultancy work.
Professor Cortese further explained that current university accounting practices obscure the true beneficiaries of these vast sums, making it impossible to ascertain how much is paid to individual contractors versus large consultancy firms. “There’s no clear definition about what a consulting engagement is, and how it’s to be reported,” she observed.
Federal Education Minister Jason Clare echoed these concerns, expressing his shock not only at the amount spent but also at the inability to break down these figures. “It is shocking, but what is also shocking is that you can’t break it down, and we should be able to know. We invest a lot of money in our universities,” Mr Clare told the program. He asserted that the Australian public has a right to know who these consultants are, the nature of their work, and the justification for these expenses.
However, Universities Australia chief executive Luke Sheehy defended the practice, characterising universities as complex organisations requiring expert advice. “We need to make sure we’ve got expert advice on how those buildings adhere to occupational health and safety arrangements, that our IT capability is cybersecurity safe,” he said, adding that such expertise is often accounted for as consultancy work and is an “appropriate spend.”
In response to these concerns, the Albanese government has pledged to implement new university governance principles that would mandate greater disclosure of consultancy spending, its purpose, and its value.
‘Cookie-Cutter’ Advice and Budget Cuts: The UTS Case Study
The significant expenditure on consultants has become a focal point of contentious disputes, as seen in the case of the University of Technology Sydney (UTS). Faced with the need to reduce debt and balance its budget in 2024, UTS turned to external consultants from KPMG, rather than leveraging the expertise within its own Business School.
KPMG was reportedly paid approximately $7 million for advice that UTS academics have described as generic and uninspired, or “cookie-cutter,” in its approach to cost-saving. Following the awarding of the contract, KPMG personnel were integrated into UTS operations, gaining access to university systems and attending staff meetings, an approach former KPMG partner Brendan Lyon described as a strategy to “infantilise the client, make them think that they can’t do things without you.” Mr Lyon, now a professor of practice at the University of Wollongong, revealed that the education sector was identified by KPMG as a prime area for revenue generation.
Accessing KPMG’s report for UTS proved challenging for university staff. It was only obtainable through a freedom of information request and was heavily redacted. A select group of academics, including associate professor Paul Brown, were permitted to view a copy under strict supervision. Dr. Brown, an expert in accounting and governance, found the report to be lacking in the expected rigour and depth, likening its presentation to a “PowerPoint presentation” rather than a comprehensive analysis. He was particularly taken aback by a suggestion to restructure the university into a “triangle-shaped” organisation, which he found to be a simplistic and inappropriate model for an institution engaged in complex research and innovation. “Just the lack of understanding … was astounding,” he remarked.
KPMG declined to be interviewed for the investigation. However, at a NSW parliamentary inquiry, KPMG’s national education sector leader, Chris Matthews, stated that the firm’s work for UTS aimed to identify “many different opportunities for the university with regard to financial sustainability,” including an analysis of academic performance and research income as key revenue streams. Mr Matthews maintained that KPMG provided advice, and that decisions regarding staffing, academic structures, and organisational changes were ultimately the responsibility of UTS leadership.
Under Vice-Chancellor Andrew Parfitt, UTS subsequently implemented significant budget cuts amounting to $85 million annually, resulting in the elimination of 143 courses, 839 subjects, and the redundancy of over 120 academic staff. Further cuts to professional staff are anticipated later in the year. In a statement, UTS defended these actions as necessary to address financial pressures beyond its control, such as the impact of COVID-19 and government policies on international students, asserting that these measures were crucial “to secure the future” and continue funding teaching and research priorities.
Consultants on Councils: A Conflict of Interest?
Concerns are also mounting over the presence of consultants within university governing bodies. Professor Cortese’s analysis of 14 university councils revealed that a significant proportion of members held past or present consulting roles with major firms like Ernst & Young, PwC, KPMG, Deloitte, McKinsey, and Boston Consulting Group. “Twelve of the 14 universities had council members, who had substantive roles as consultants from firms such as Ernst & Young, PwC, KPMG, Deloitte, McKinsey, and Boston Consulting Group,” she reported.
Senator Sheldon views this as a deliberate strategy: “I believe that there’s an intended infiltration of our governing boards by consultancy firms. It’s all the mates looking after each other and seeing these consultancy costs balloon right across the university sector.”
A particularly striking example involved the appointment of John Dewar, a former vice-chancellor of La Trobe University and then a partner at KordaMentha, as interim vice-chancellor of the University of Wollongong in June 2024. Within days of his appointment, KordaMentha was invited to tender for a project to review the university’s operations, subsequently securing a contract worth approximately $3.8 million. During his eight-month tenure, Professor Dewar was granted one day off per fortnight to work for KordaMentha, earning a $1 million annual salary from the university. The University of Wollongong stated that a “Conflict Management Plan” was in place to ensure separation from KordaMentha’s engagement and that Professor Dewar was not involved in the tender process.
However, Fiona Probyn-Rapsey, a former union delegate at the university, found this arrangement unacceptable. “It sidesteps the whole issue of the fact that as vice-chancellor it’s his job as part of the executive management to oversee that operations review and to be responsible for the decision making in relation to that operations review,” she argued.
Flawed Data Driving Drastic Decisions
A critical issue underpinning many consultancy recommendations is the quality of data used. KordaMentha’s report, which advocated for substantial cuts at the University of Wollongong, included an admission of unreliable workforce data. The report explicitly stated that “the accuracy of casual workforce data cannot be verified” and that “despite significant cleaning efforts, underlying data quality issues limit the extent to which the workforce data can be relied upon.”
Professor Probyn-Rapsey, among approximately 200 academics who lost their jobs at the University of Wollongong following this report, highlighted the irony: “They had poor quality data when it came to the workforce, when it came to workloads, and when it came to the reliance on casual staff, and they note in their own report that despite cleaning efforts, they still can’t really stand by the quality of the data.” She lamented that “Poor quality data is not an obstacle for consultancy groups to come up with wholesale job losses in those institutions.”
Academics at UTS reported a similar scenario with the data provided to KPMG. Sarah Wise, a health workforce expert, was dismayed by the flawed data used to assess course viability at the School of Public Health, where she and her colleagues faced significant job losses. “We know that that data was fundamentally flawed. We’ve seen the report that was used, and it was never corrected,” she stated. Dr. Wise explained that external consultants often lack the expertise to question the data they are given. “The problem with using external consultants is they don’t know what questions to ask. They basically take what’s given to them, and then they use it.”
For academics, whose work relies on precision and data integrity, the use of unreliable information to justify job losses and restructuring is deeply frustrating. Professor Probyn-Rapsey summarised the sentiment: “This kind of data is known as garbage in, garbage out. And the garbage out that consultancy groups are using is the garbage that we’re presented with to justify our job losses and the restructuring of our universities.”
