The crackdown that cost more

There was a crackdown. In 2023 the PwC tax-leak scandal handed the government a villain, and the government took it: a pledge to wean the Commonwealth off the Big Four, to rebuild the public service, to stop the great outsourcing of the state's own thinking.

Then the numbers for 2024-25 landed. Total federal consultancy contracts reached A$968.6 million, up roughly 48 per cent on the year before. The reduction had, in aggregate, produced no saving at all.

This is the switch. The Big Four were cut. The bill was not. A near-billion dollars a year still walks out the public door and into private hands. All that changed is the names on the envelope.

01The crackdown was announced. The bill went up.

Start with the paradox, because everything else follows from it. The government spent two years positioning itself against consultants. It commissioned reviews, capped spend, talked about in-house capability. And the total went up, not down.

The figure comes from the Australian Greens, who ran the AusTender contract data and released it in August 2025. It is worth being precise about the word record. This is the highest recent total, higher than the final Morrison-government year of A$787.6 million and well above the prior year's A$653 million. It is not a verified all-time federal record: on a broader basis earlier years have topped A$1 billion. But as a measure of the crackdown's effect, the direction is the only thing that matters, and the direction is up.

The Greens frame this as theatre, a crackdown for the cameras. That framing is theirs, a political read from a party with its own case to make. But the underlying figure is not spin. It is the government's own contract data, and it says the promised reduction did not reduce the total.

02The Big Four were cut. The saving never arrived.

Here is the part that is true, and the part the government prefers you stop reading at. The Big Four really were cut. PwC, KPMG, Deloitte and EY saw their combined federal consulting spend fall by roughly A$800 million since 2022. Their share of the pie shrank from 11.0 per cent to 8.1 per cent. On its own terms, the crackdown worked.

So follow the arithmetic. The Big Four lost roughly A$800 million. The total consultancy bill rose to A$968.6 million. Both of those things are true at once. The only way both are true is if the work did not stop. It moved.

The Big Four lost A$800 million. The bill still hit A$968.6 million. The money did not leave. It changed hands.

03The work did not stop. It moved down the food chain.

Where the Big Four retreated, the mid-tier advanced. Across the sector, mid-tier firms more than quadrupled their federal revenue, to about A$1.7 billion. That aggregate is broad, hundreds of firms, not a handful, and it should not be read as three boutiques splitting the spoils. But inside it, the individual growth curves are steep enough to tell the story on their own.

Take Nous Group. In 2019 its federal consulting work was worth A$2.7 million. By 2024-25 it was about A$31 million, a rise of roughly eleven times. Take McGrathNicol: from A$1.9 million to A$11.3 million, roughly six times over. Callida added about A$6.9 million. These are the firms picking up the redirected work, one contract at a time.

Barbara Pocock, the Greens senator who has pursued the consultants harder than anyone in the Parliament, put it plainly when the mid-tier figures emerged.

04The pattern did not end. It hardened into 2026.

A single year could be a blip. This is not a blip. The most recent data, covering the first half of the 2025-26 financial year, from July to December 2025, shows the whack-a-mole continuing. In that six-month window alone, 52 mid-tier and specialist firms each won more than A$10 million in federal consulting work.

Squeeze one part of the market and the demand does not vanish. It reappears somewhere cheaper to name and harder to see. The crackdown did not turn off the tap. It widened the number of hands the water runs through.

05Meanwhile, the state forgets how to do the job itself.

The deeper cost is not the invoice. It is what the outsourcing does to the buyer. When a department rents its thinking for long enough, it stops being able to think. And the government has now said so, in its own minister's words.

In early July 2026, at the National Press Club, Defence Minister Pat Conroy revealed that a taskforce sample of about a dozen major Defence projects had seen costs rise by an average of 38 per cent before any contract with industry was signed. Across that sample, the inflation added up to roughly A$29 billion. Read that carefully: this is estimate inflation, taxpayer exposure baked in before a signature, not cash already spent. But it is exposure the public carries all the same.

The taskforce named the cause, and the cause is the whole thesis of this article. Defence's own costing capability, it found, had atrophied.

This is the mechanism the watchers call Regulatory Capture, dressed in a procurement suit. The same firms that scope and cost the projects then bid to deliver them. That is The Revolving Door running inside a single contract. It is not, in this pass, a proven line from consultant dependency to any specific blowout, and we will not draw one we cannot source. But the shape is familiar: a state that has outsourced the function of costing to the industry that profits from the cost.

06Extraction, re-badged as reform.

Here is who pays. You do. A near-billion dollars a year, A$968.6 million and climbing, still leaves the public purse for outside advice. And the public service that was meant to be rebuilt keeps outsourcing its core work while its own capability thins.

Here is who gains. The mid-tier and specialist firms now catching the redirected work. And a government that gets to bank a Big Four win, point to the A$800 million cut, and hope nobody adds up the total underneath it.

That is the rort in one line. The crackdown moved the label on the invoice. It did not move the money out the door. A reform that changes the recipient and not the sum is not a saving. It is extraction, re-badged.

If it's a rort, we cover it.