MFAT spends $9m to cut $25m

Foreign Affairs Minister Murray McCully has acknowledged $9.2 million is a "significant amount" for his ministry to spend on a razor gang to save money, but says the Government is trying to strike a balance.

McCully yesterday told Parliament the Ministry of Foreign Affairs and Trade (MFAT) had 30 people working in its "change programme office", including consultants and permanent staff, and was contracting services from a range of external consultancy firms, at a cost of $9.2 million in the current year.

The Government has asked the ministry to trim about $25m a year from its budget.

Details about the razor gang follow kick-back over MFAT's radical restructuring plans from 49 top diplomats - including political appointee and former National MP John Carter - who put their names to a letter warning against spending cuts.

McCully this morning said it wasn't his job to tell chief executive John Allen how much he could spend on the restructuring process.

However, it was a "significant amount of money".

"The public I think expects us to get the balance right here between making some savings, getting some modernisation and making sure we don't destroy the talent base that New Zealanders have invested a great deal in over the last decade," he told Radio New Zealand.

"It's a careful balance."

Restructuring a ministry which had a budget of $400m and operated in 50 countries was a difficult task, but the ministry had already shaved $135m a year out of the budget it inherited from the previous Labour government, he said.

The Government has already moved to distance itself from the restructuring which is being led by Allen.

McCully has made public a four-page letter that is highly critical of some aspects of the proposal, particularly plans to slash pay and allowances.

He wants Allen to halve the number of proposed jobs cuts, initially put at 300, and has rejected the plan to contract out consular services.

McCully said today many of the concerns raised in the letter from the 49 heads of mission had already been addressed in his letter.

"They are addressing proposals I have already last week ruled out.

"The feedback I have had from many heads of mission both in writing and in my oral conversations is that they share concerns identified in my letter and there will be no further discussion of issues ruled out."

Labour MP Phil Goff revealed yesterday that among the consultants being hired by MFAT was a man in Singapore being paid $250,000 to come to New Zealand once every six weeks.

MFAT later confirmed that former New Zealand Institute boss David Skilling was based in Singapore and was employed as a contractor by the ministry.

MFAT is preparing to fly its top diplomats back from around the world next month as it tries to stop the exodus threatened by staff over the restructuring.

The only heads of mission not to sign the letter were political appointees under the National Government: former Labour prime minister Mike Moore, based in Washington; former military man Martyn Dunne, based in Canberra; former National MP Jim McLay, based in New York, and former National MP Mark Blumsky, based in Niue.

The Dominion Post