Consultants cost govt agencies hundreds of millions

KATE CHAPMAN
Last updated 12:33 11/09/2012

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Increased use of consultants in the public sector is likely to continue for some time, Finance Minister Bill English says.

But Labour leader David Shearer said the trend was costing taxpayers.

Lists of the top 10 spends on redundancies and consultants in the public sector reveal the highest redundancy spends by government departments in the past five years, totalling just over $114m.

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

English said there was a lot of work to be done and the increased consultancy spend would continue for some time yet.

"Despite the fact that they had plenty of money, the previous government ran down the technology infrastructure of the public service to a disgraceful level and we are having to spend billions to rebuild it."

There was large scale change needed in the public sector to provide "more for less".

Consultants were used for specialist skills in relation to the Christchurch earthquake and IT projects, English said.

"We just don't have public servants sitting around who know, for instance, how to redo immigration's global information system because it's got offices all over the world. We don't have public servants sitting around who know how to redo the 25-year-old tax collection system."

In some cases global specialists were needed and ordinary public servants or analysts simply could not do the work, he said.

English said it was a "nonsense" to compare redundancy and consultant costs.

"They're not connected in the sense of one being used to fund the other."

Government departments had a fixed amount of money so could not blow out spending on consultants, he said.

State Services Minister Jonathan Coleman said the public sector was doing more with constrained resources.

But public service chief executives were responsible for their spending on consultants, he said.

"If you look at the wider picture we're actually delivering better services within fixed baselines so I think, the wider picture, we're actually going in the right direction."

Shearer said the increased use of consultants was actually costing taxpayers more.

People were being made redundant and going through a "revolving door" and being hired as "expensive consultants".

"Lets have a look at these consultants, we're employing expensive consultants and laying off people who are already working there actually it's costing the public service more."

Stuff recently reported a former Ministry of Health staffer left the department and established a consultancy business only to be awarded $1.7m in contracts from the ministry.

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Documents released under the Official Information Act show the company set up by former ministry staffer Debbie Ryan won contracts totalling $1,698,930 in 2011-12. They mostly related to Pacific Island health and leadership and career development.

She left the ministry of her own accord and was not made redundant.

Stuff also reported on revelations former Ministry of Foreign Affairs and Trade staffers were being awarded tens of thousands of dollars in uncontested contracts.

Shearer said the use of consultants was not making the public service a more efficient place.

Labour MP Chris Hipkins said the latest figures made a mockery of National's claims about focusing on frontline workers.

"John Key promised New Zealanders that National would cap, but not cut, the number of staff working in the public service. He's broken that promise, and Kiwi taxpayers are footing the bill for it," Hipkins said.

- Fairfax Media

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