Why government agencies should reduce maverick spending

Government entities in Australia are under immense pressure to manage taxpayer money better and ensure transparency and accountability. Procurement and the processes around it demand particular attention. Yet, despite the controls and practices in place, government departments and local councils often need help with the challenge of maverick spending; unauthorised or non-compliant purchases deviate from established procurement protocols. Addressing this issue is critical to maintaining public trust and ensuring a transparent, accountable system for government spending.

At the recent Local Government Procurement Conference in Sydney, Ron Hoenig, NSW Minister for Local Government, highlighted local councils’ pivotal role. He noted that councils operate in an environment of heightened public scrutiny, with constrained budgets and mounting expectations to deliver more with less. This context reinforces the urgency for local councils and government entities to reduce maverick spending to make the most of their limited resources.

The cost of maverick spending

Maverick spending can be particularly detrimental for government entities. Public funds are finite, and each dollar spent outside approved processes represents a missed opportunity to allocate resources where they are needed most — whether in infrastructure, health care, education or public safety.

Not only does misuse of funds hinder the delivery of essential services, but it also directly impacts citizens, affecting the quality and availability of critical resources. Addressing this problem isn’t just about cutting costs; it’s about creating a public expenditure system that prioritises citizen needs and operates transparently.

Lack of visibility in procurement processes

A core issue with maverick spending is the need for more visibility it creates. Purchases made outside approved channels often go unreported, making it challenging to track and manage spending across departments accurately. This lack of oversight can lead to poor decision-making, as data inaccuracies prevent procurement teams from understanding spending patterns and identifying areas for improvement.

As Hoenig noted, councils need to strengthen their contract management and procurement skills to operate from a position of strength. With clear visibility, procurement teams can take advantage of strategic oversight, not allowing maverick spending to go unchecked and complicating efforts to meet budgetary objectives.

Compliance and legal risks

Compliance is critical in government procurement, where policies, regulations and budgetary frameworks are tightly monitored. Maverick spending poses legal and regulatory risks, especially in sectors with stringent oversight.

Hoenig highlighted the mounting expectations for councils to deliver services efficiently within budget constraints, which further pressures procurement teams to uphold compliance. Reducing maverick spending mitigates these risks, ensuring public funds are used responsibly and in line with policy objectives.

Lost cost-saving opportunities

Government procurement often operates at scale, allowing for carefully negotiated contracts that yield significant savings. Purchases made outside these agreements bypass these savings and increase overall costs. Reducing maverick spending enables government departments to unlock the potential savings inherent in these negotiated contracts, thereby improving the efficiency of public expenditure.

With the proper systems, councils can capture these cost-saving opportunities and reinvest the savings into public services — a key priority highlighted by Hoenig. By optimising contract adherence, councils can stretch their budgets further, creating value for citizens and enhancing service delivery.

The benefits of procurement digitisation

Digitising procurement processes is essential to reducing maverick spending in government entities. By implementing a digital procurement and supplier management platform, councils and government departments can gain visibility into spending, streamline workflows, and foster collaboration between departments, suppliers and buyers. Hoenig’s emphasis on the need for councils to upskill in contract management aligns well with the capabilities offered by digital procurement systems.

There are three key benefits of digitising procurement: enhanced visibility, improved supplier management and streamlined compliance.

1. Enhanced spend visibility

A centralised digital procurement platform consolidates all purchasing activities, offering complete visibility into departmental spending. This transparency allows government procurement officers to track real-time spending data, spot trends and anomalies, and hold departments accountable for unauthorised purchases. Such oversight allows procurement teams to identify and address maverick spending before it escalates.

With enhanced visibility, procurement teams can create comprehensive reports that align with policy guidelines, making data-driven decisions that support budget objectives. This ability to monitor spending in real time empowers councils to act promptly and ensure compliance across the board.

2. Improved supplier management

Digitising procurement transforms the way government entities engage with suppliers. A digital platform allows procurement teams to efficiently manage supplier relationships, monitor contracts and ensure purchases align with agreed-upon terms. Councils need to negotiate from a position of strength, and a digital procurement platform enables just that — reducing the likelihood of maverick spending and promoting strategic collaboration with suppliers.

Automated contract management makes it easier for procurement teams to track existing agreements and spot any purchases made outside approved contracts. By leveraging supplier performance insights, councils can ensure timely deliveries, quality assurance, and adherence to terms, ultimately fostering a collaborative environment that benefits buyers and suppliers.

3. Streamlined compliance

The traditional procurement process can be slow and complex, often prompting departments to seek quicker, less compliant alternatives. A digital procurement platform simplifies and automates processes, reducing bottlenecks and making it easier for departments to adhere to established procedures. This directly addresses Hoenig’s call for councils to operate more effectively within budget constraints, as streamlined compliance processes reduce the temptation for maverick spending.

Automated workflows ensure that procurement teams can uphold compliance efficiently, enabling government departments to avoid costly errors and maintain public trust.

Conclusion

As government departments and councils face growing budgetary pressures, reducing maverick spending is critical to creating a more accountable and responsive public sector. This issue impacts more than costs; it affects service quality, public trust and overall government efficiency. By digitising procurement and supplier management processes, departments and councils can achieve transparency, reduce unauthorised spending and unlock long-term value.

Hoenig’s insights reinforce the potential of procurement to transform local governments and make a meaningful impact on communities. With digital solutions, procurement professionals can gain better visibility into spending, manage supplier relationships and monitor contract adherence more effectively, reducing the risk of maverick spending. This enables taxpayer money to be used responsibly, delivering better outcomes for citizens and contributing to a more efficient, accountable government.

Reducing maverick spending isn’t just about cost control; it’s about fostering a government that operates transparently and efficiently and is committed to serving its citizens.

*Adam Bowles is Managing Director for Australia & New Zealand at OneAdvanced.

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