As fallout from the PwC scandal continues, universities emerge as another sector exploited by the largest consultancy firms. By Tim Moore.

The Big Four consultants have captured universities

The side of a University of Melbourne building.
The University of Melbourne spent $38 million on consultancies in 2022.
Credit: AAP Image / James Ross

One of the many revelations to emerge from the current PwC tax scandal is just how deeply the tentacles of private consultancy companies have penetrated our national institutions. One such institution is our universities. In Victoria – where I worked in the university sector for 30 years – a survey of university annual reports shows about $70 million was outlaid on consultancies in 2019 alone. There is evidence this spending fell a little during the pandemic – when universities experienced some loss of revenue – but this has now ramped up again. The figure last year was a new high – $86 million. To put these recent numbers into perspective, 10 years ago the spending was estimated at $17 million. A decade before that, it was virtually nothing.

Victoria is home to about a quarter of the country’s universities. Given that consultancy hiring is known to be endemic throughout the sector, it’s possible to extrapolate from the Victorian numbers a spend of about $350 million nationally for the year 2022 alone.

So what are these precious public resources being devoted to – and is there any sense of institutions getting value for what they pay? By law, universities are required to report the range of outside services they have hired during the previous year. One would not quibble with some of the services recruited – IT services, legal services. Far and away the main types of services listed, however, are of the strategic management variety. Some of the main providers of such services are the so-called Big Four – PwC, KPMG, Ernst & Young (EY) and Deloitte. Two of these, PwC and KPMG, are particularly active in Victorian universities.

The reporting of these strategy-style services in university annual reports is highly minimal – often single phrase line items that betray little about the nature of the funded activity. For example: “strategic consulting”, “strategic development advisory services”, “enterprise leadership solutions”, “change management services”, or even just “consulting services”. Outside the senior management group little is known by the university community about these activities. There is no information on what service was recruited and why, how the provider was selected, what was the ultimate value of the work.

It is often only after the “efficiency review”, or “change management proposal” has been completed by the consultancy that staff become aware of what’s been going on. Being informed at this point often means finding out your unit or department is to be restructured, or closed altogether, and positions invariably shed.

One institution worthy of special mention is the University of Melbourne. In 2022, the university spent $38 million on consultancies. At the same time, the university is dealing with another, very similar number: $31.5 million of wages unpaid to its own staff, now the subject of court action by the Fair Work Commission.

It is significant this disaster did not come to light via auditing processes conducted by these consultancies, but through the dogged investigations of the National Tertiary Education Union. Sitting embarrassingly among the line items in Melbourne University’s 2022 disclosure statement is a fee of $750,000, charged by PwC for “consultancy services for compliance matters”.

Consulting firms typically engage in “back office” administrative functions. It speaks to the growing hubris of this industry that in recent times some firms have felt qualified to move into the actual core function of universities – education. This has often come with the support of university administrations. The first hint I had of this development was at an education conference I attended at my university in the early 2010s. Delegates were taken aback when the pro vice-chancellor of learning transformations proceeded to wave in front of us a document authored by EY – “University of the Future”. “This is what you all need to read,” she declared. “It’s organisations like EY that are showing the way in our sector.”

At the time, this seemed a highly improbable – if not, bizarre – proposition. Complacency, however, is a dangerous mindset in the troubled world of higher education.

Five years later I found myself at a staff retreat where a new “cutting edge” education strategy for the institution was unveiled. A consultancy company – not EY but a local outfit increasingly active within the sector – was employed to facilitate the event. What staff didn’t know at the time was that the documents underpinning the new “blueprint” had been prepared – at considerable expense – by the company. The shame of this is the educational expertise needed for such work resided in abundance among teaching staff within the university, yet was overlooked.

Given perverse developments such as these, the question is why university managements have become so seduced by the consultancy industry. Part of the explanation lies in these companies’ highly developed skills at making their services appear indispensable. Striking fear and doubt into the hearts of university administrators is a common tactic. Thus, EY’s “University of the Future” is full of all sorts of dire, and unsubstantiated, predictions for the sector: “Over the next 10-15 years,” it declares, “the current public university model in Australia will prove unviable in all but a few cases.” Having made these claims, it explains that only firms such as EY can help: “Universities should assess if their current model is future proof. EY is uniquely placed to assist in these deliberations.”

But such tactics are all a bit of a “con”, as Mariana Mazzucato and Rosie Collington argue in their recent book, The Big Con: How the Consulting Industry Weakens our Businesses, Infantilizes our Governments and Warps our Economies. There is nothing specialised or unique, they say, about the expertise such firms offer to their clients. Rather, consultancy knowledge is by its nature irredeemably “generic, context-free and shallow” – typically a grab bag of all-purpose notions, stratagems and rhetorical tricks that can be taken ready-made from one client to the next, and often from one sector to the next.

In the university setting, this has translated into the promulgation of a set of ideas – predominantly neoliberal in character – that are, for most academics, an unmitigated disaster: command and control centralisation over the lifeworld of faculties; the teaching of “marketable job-ready skills” over deep learning in the disciplines; organisational “disruption” over stability and coherence; privatisation over a commitment to the public and civic roles of universities.

But not all blame can be laid at the feet of the consultants. University managements have played their part – and much of this can be linked to the increasingly troubled relationship that now prevails between university leaders and staff. Eminent sociologist Raewyn Connell, in her book The Good University, characterises this relationship as fundamentally one of “distrust”.

This has come about, she says, from a range of less-than-happy developments: the constant restructuring of faculties, departments and administrative units, often as the outcome of consultant reviews; the precarious working conditions of many rank-and-file staff; a contrasting ballooning of executive salaries; the increasingly authoritarian management style adopted by some university leaders, where dissent among staff is less and less tolerated. Examples of management heavy-handedness were reported previously in The Saturday Paper, where staff elected to university councils have faced highly punitive treatment after raising concerns about university decision-making, including around consultancy spending.

It is in this environment of distrust and discord that university administrators have turned increasingly to outside agencies as a way of advancing agendas and getting what they want done. Unlike university staff, who need to be persuaded of the wisdom of policies and directions, the consultants typically seek to deliver on such initiatives without question – while also seizing whatever opportunities are on offer to further advance their own interests in future contracts.

Universities, like many of our national institutions, have been allowed to fall into serious disarray in recent years. “Broken” is the term I often hear from former colleagues. There is much work government needs to do to repair the damage. In seeking to revive our once-lauded university system, inquiring into the unhealthy relationship that exists between institutions and these outside consultancies would be a useful place to start.

This article was first published in the print edition of The Saturday Paper on June 17, 2023 as "Adding consult to injury".

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