Rise in consultant costs 'gob-smacking'

ANDREA VANCE
Last updated 05:00 05/12/2012

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Treasury's spending on consultants is set to log a 1000 per cent increase over five years, figures reveal.

The Government's economic adviser is meant to play a leading role in delivering cost savings as part of the Government's Better Public Services policy.

But figures uncovered by Labour MP Chris Hipkins reveal its spending on contractors has soared since National took office.

Treasury shelled out $1.968 million on consultants in the 2007-08 year. It is expected to spend $21.927m in 2012-13 - up $19.959m, or 1014 per cent, which Mr Hipkins says is "gob-smacking".

In this financial year $17m will be paid to consultants on the state-owned assets sale programme. But Mr Hipkins said that even excluding this money, outsourcing costs have more than doubled.

The Government favours "buying in skills", he said.

"When you have a government determined to slash budgets across the state sector and in the process lay off staff, it is inevitable departments will find themselves in the position of being forced to use consultants and contractors."

A spokesman for Treasury said the contractors were Crown advisers or "joint lead managers", or giving marketing, design and communications services, legal advice, technology and logistical services and acting as marketing and communications directors.

He said Parliament had appropriated money for the asset-sales programme.

"To ensure value for money, the Treasury's role is to maximise the outcomes achieved when we spend the appropriated money. We're doing this by using competitive public tendering, negotiating contracts with favourable prices, close and careful management of suppliers' performance against their contracts, and transparent reporting of costs to the public and Parliament."

Documents provided to Parliament's finance and expenditure committee show Treasury has contracted marketer Clemenger BBDO Ltd and public relations firm Senate SHJ for the Mighty River Power float campaign.

In 2011-12, $476,000 was spent on policy advice from contractors.

The figures also showed six contractors during the past year have previously been employed at Treasury, including KPMG, Deloitte, and Ernst Young and Deutsche Bank.

Cato Partners NZ was paid $20,000 to redesign the Treasury website, while Deadline, owned by Bill Ralston and Janet Wilson, received $37,000 for media training.

Talent 2 received $83,000. The New Zealand Institute of Economic Research got $157,000 and The Hackett Group Australia got $272,000 for advice.

CONSULTANT BILL

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2007-08 $1,968,000

2008-09 $2,037,000

2009-10 $5,542,000

2010-11 $4,674, 000

2011-12 $14,445,000

2012-13 $21,927,000 (budget)

WHO GOT WHAT?

Those paid over $100,000 from June 2011 to June 2012:

KPMG (accountancy and tax advice) $177,000

Claret Associates Limited (monitoring SOE performance) $139, 000

Deloitte (a strategic review of Kordia) $100,000

Ernst & Young $197,000

PricewaterhouseCoopers (research reports) $110, 000

Deutsche Bank (AMI recapitalisation) $516,000

GHD Limited (reviews of asset management practices in government agencies) $167,000

Lewis Weatherall (management consultant) $119,000

Davanti Consulting (solution and network architecture) $284,000

Daylight Consulting $194,000

Tenzing (policy advice) $176, 000

The Hackett Group Australia (policy advice) $272,000

Taylor Fry Pty (policy advice $710, 000

Tax Policy Advisers LLC, USA (policy advice) $102,000

- Fairfax Media

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