Consultants cost agencies millions

Last updated 05:00 11/09/2012

The 10 highest redundancy spends by government departments in the past five years totalled just over $114m.

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Government departments have spent millions making staff redundant only to pay hundreds of millions in consultants' fees, figures show.

Lists of the top 10 spends on redundancies and consultants in the public sector reveal the Inland Revenue Department spent the most on redundancy payouts and external consultants.

Since the 2008-09 financial year, the IRD has spent more than $31.3m on departing staff, with a total 539 positions lost in that time. It spent $125.2m on external consultants between 2008-09 and 2010-11.

IRD deputy commissioner Mary Craig said the redundancy figures reflected changes in the way the department worked and greater use of online services.

External consultants were hired for short-term work on specific projects and were not the result of staff changes, she said.

The 10 highest redundancy spends by government departments in the past five years totalled just over $114m.

Many of the same agencies spent a total of $910.5m on outside help from 2008-09 to 2010-11.

Labour MP Chris Hipkins said taxpayers were footing the bill as government departments forked out millions hiring external help.

"It's no surprise that the departments who have spent the most on redundancy are also the biggest spenders on consultants and contractors."

Mergers were also behind the job losses at the Primary Industries Ministry, director-general Wayne McNee said. Combining the agricultural, horticultural, fisheries and aquaculture, forestry and food sectors would save $20m a year in operating costs, he said.

Likewise, the Internal Affairs Department said its redundancy bill largely reflected the recent integration of Government Technology Services, Archives New Zealand, the National Library of New Zealand and the Charities Commission.

The Corrections Department had the second highest redundancy spend: $18.5m.

Spokesman Chris Wright said $14m of that was due to contracting out the management of Mt Eden and Auckland Central Remand prisons.

The department's use of consultants was on significant projects including double-bunking.

Housing New Zealand came in fourth in spending on consultants, partly due to extra work following the Christchurch earthquake.

Spokesman David Balham said consultants hired during the period in question provided services outside the scope of normal business.

ACC is reviewing its consultant management processes and policies with findings due in November. A spokeswoman said consultants were hired on an "as needed" basis and provided independent expert advice over a range of areas.

A Justice Ministry spokesman said it was more cost effective to contract such expertise on a short-term basis for specific projects.

Related story: Small agency big on consultants


Redundancies (2008-09 to 2012-13)

  • IRD $31.4m
  • Corrections Department $18.5m
  • MOBIE $12.4m
  • Defence Force $11.9m
  • Primary Industries Ministry (including MAF and MFish) $10.7m
  • Lands $7.5m
  • Conservation Department $6.2m
  • Health Ministry $5.3m
  • Internal Affairs Department $5.1m
  • Justice Ministry $5.1m
  • TOTAL $114.1m

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Consultants (2008-09 to 2010-11)

  • IRD $125.2m
  • Conservation Department $123.2m
  • MOBIE $104.5m
  • Housing New Zealand $101m
  • Agriculture and Forestry Ministry (now MPI) $82.4m
  • Defence Force $79.3m
  • ACC $75.4m
  • Corrections Department $74.6m
  • Justice Ministry $73.5m
  • Health Ministry $71.4m
  • TOTAL $910.5m

- The Dominion Post


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