Photo source: Britannica
The public service’s allocation of at least $10.8 million to contractors and consultants for restructuring efforts has raised concerns, particularly from the Public Service Association (PSA). The PSA criticises this reliance on external contractors, labelling it a “dangerous policy.”
PSA argues that these contractors often lack the necessary institutional knowledge to understand the impacts of budget cuts being implemented as part of the government’s strategy to reduce expenditures.
Meanwhile, Finance Minister Nicola Willis has clarified that the government did not issue specific instructions to agencies regarding the implementation of cost-saving measures or the use of external consultants.
In January, Willis announced her intentions to reduce annual public service spending by $1.5 billion and requested that “all departments” identify savings of either 6.5% or 7.5%.
In a report by BusinessDesk, it said that out of 25 ministries and Crown agencies it requested data regarding their restructuring efforts under the Official Information Act (OIA), 20 agencies disclosed their expenditures on contractors and consultants involved in these restructures, excluding GST and agency fees.
Topping the list was Kāinga Ora, which spent nearly $3 million on contractors and consultants to assist with its restructuring and broader operational model transformation.
Following Kāinga Ora, the New Zealand Police reported spending $1.5 million. The Accident Compensation Corporation (ACC) also made nearly $1 million in consultants who charged up to $300 per hour.
Both Oranga Tamariki and the Ministry of Education each spent about $800,000 on contractors, including services from Deloitte at the same hourly rate.
“Bringing in expensive contractors to sack loyal public servants is a slap in the face to dismissed workers, many of whom have years of service and are specialists in their fields,” said PSA assistant secretary Fleur Fitzsimons, contending that the expenditures undermined the government’s assertions about its commitment to reducing reliance on contractors.
Willis responded, saying that the contractor spending must be understood within the framework of the $1.5 billion reduction initiative. The government aims to cut contractor and consultant expenditures by $400 million compared to the total for 2022/23.
In the fiscal year 2023/24, savings of $274 million have already been realised, and Willis expects the complete $400 million reduction to be achieved in the current financial year.