Editorial: Learning the hard way about consultants

Last updated 05:00 17/09/2012

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OPINION: Labour MP Trevor Mallard is in no position to lecture the Government on the folly of public service restructuring. As state services minister from 1999 to 2005 he presided over the expensive reshaping of several ministries.

Nevertheless his views on the topic should be required reading for anyone with ministerial ambitions. As expressed in March in a post on Red Alert, the Labour Party blog, they can be summarised as follows: change takes longer than planned, it is always accompanied by a drop in morale and productivity, important skills and institutional knowledge will be lost and some of the best people take redundancy only to be "rehired on contract at 150 per cent of their former rate".

Recent experience, and figures assembled by his Labour colleague Chris Hipkins, suggest the current crop of ministers is determined to learn the same lesson all over again.

Since July 2008, 10 state agencies have spent a combined $114 million on redundancy payments. Over the same period ministries and departments have spent mind-boggling sums employing consultants and contractors on short-term contracts. The top-10 list compiled by Mr Hipkins, from figures supplied to parliamentary select committees, shows the biggest spenders have collectively paid consultants $910 million since 2008. Not all feature among the top spenders on redundancy, but the majority do.

As Mr Mallard's comments indicate, this Government is not the first to embrace restructuring or to approve the employment of consultants by state agencies. Presented with a government agency, some ministers are unable to resist the temptation to tinker with it. Employing external consultants, be they lawyers, IT specialists, recruitment consultants, architects or experts from other fields, is often cost-effective and sensible. Consultants can come with expertise that is not required for the day-to-day running of operations, they only have to be employed while their services are required and they don't accrue sick leave or holiday pay.

However, Mr Hipkins' figures suggest the use of consultants is escalating at an alarming rate at the same time ministers are embarking on a questionable round of restructuring.

The botched downsizing of the Foreign Affairs and Trade Ministry has consumed millions of dollars and persuaded key staff to dust off their CVs, for no discernible gain.

The amalgamation into a single agency of the ministries of economic development and science and innovation and the departments of labour and building and housing has, if the Government is believed, created a new super ministry dedicated to serving businesses' needs. If, on the other hand, Lambton Quay scuttlebutt is believed it has created an unholy mess that has distracted bureaucrats from their jobs.

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The lesson from the latest restructuring echoes that from earlier iterations. Institutional knowledge should not be lightly discarded. Replacing it can be costly. Organisations should not be restructured for faddish reasons. Putting Humpty together again is nigh on impossible.

- © Fairfax NZ News

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