$12m paid out in Govt redundancy packages

19:11, Aug 19 2012
Chris Hipkins
Chris Hipkins.

More than $12 million has so far been paid out in redundancy packages for staff shed from the departments behind the new Business, Innovation and Employment Ministry (Mobie), Labour claims.

The ministry brought together four government departments when it was established last month.

Labour carried out an analysis of redundancy figures from the past four years for those departments as well as others "contributing to" Mobie. It suggests $12.4m has been paid to about 257 staff laid off across the departments and ministries since National took power in 2008.

The greatest number of redundancies was from the former Labour Department, where 128 staff were gradually let go over four years, adding up to a $5.9m bill, according to Labour.

Significant redundancy costs were also incurred at the former Economic Development Ministry (49 staff paid $2.9m) and the short-lived Science and Innovation Ministry (41 staff paid $1.4m).

More redundancy costs will be racked up when a further 39 senior management and corporate positions are made redundant at Mobie in October.


Labour state services spokesman Chris Hipkins said the figures showed "the unnecessary cost of ad-hoc restructuring".

"The National Government have no coherent plan for improving public services. They're constantly rearranging the deck chairs no matter how much it costs in the long run."

He highlighted the redundancies at the Science and Innovation Ministry, which was formed as the result of a merger last year, only to be again merged into Mobie 18 months later. Hundreds of thousands of dollars was spent on rebranding for MSI, which included 180 punnets of "promotional putty".

Business Innovation and Employment Minister Steven Joyce said "perhaps in hindsight" the mergers could have happened at once.

"But actually, I'm not sure we would have got the level of comfort that we wanted to get to do all of that at once. You do have to do some things in a progressive way.

"Sometimes you work your way through issues to get to an outcome that is the longer-term outcome."

Mr Hipkins said many of those laid off as a result of the mergers were rehired as contractors or consultants for their former employers.

More than $36.3m was spent on contractors and consultants at the Economic Development Ministry between 2008-09 and 2010-11, with $19.2m being spent in 2010-11.

"Rather than these redundancies resulting in greater efficiency in the public service, they're actually doing the opposite," Mr Hipkins said.

Some state sector employees faced their second or third round of restructuring since National came to power, which showed what he called a "shambolic" approach by the Government.

Mr Joyce said he could not vouch for the exact figures produced by Labour but confirmed there had been changes in the areas raised.

"That's been all part of reducing the size of the back office over the last three or four years across government and those agencies have not been immune to that at all," Mr Joyce said.

The Government was prepared to absorb some costs to make reasonable savings over time. The merger to create MSI had saved $4m a year, and the Mobie merger would eventually create a further $7m to $11m a year, he said.

"These guys simply are showing yet again that they do not believe in saving money . . . They show by all their actions that they wouldn't be saving money if they were in Government today."

Agencies like MED had one-off activities that were best suited to being contracted out.


"If you actually hired specialist people for those activities on an ongoing basis, you'd have a standing army of a third of the country working for you," Mr Joyce said.

Redundancies Since National won power in November 2008:

128 staff at the Labour Department, costing $5.97m

49 staff at the Economic Development Ministry, costing $2.95m

41 staff at the Science and Research Ministry, costing $1.48m

20 staff at Tourism NZ, costing $825,781

12 staff at the Foundation of Research Science and Technology, costing $160,769

6 staff at the Department of Building and Housing, costing $225,160

Unspecified number of staff at the Financial Markets Authority, costing $415,000

Unspecified number of staff at the Commerce Commission, costing $347,106

Source: Labour Party

The Dominion Post