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Redundancies, consultants, professional development

Written By: - Date published: 9:46 am, September 12th, 2012 - 12 comments
Categories: accountability, national - Tags: ,

National is the party of stupid, short term thinking. It’s evident everywhere, even in areas of supposed Nat strength like sound business management. Consider for example the abject folly of sacking a bunch of staff, and then running up $1bn in consulting fees:

Govt depts clock up $1bn in consultant fees

Government departments which have spent millions in laying off staff are responsible for nearly $1 billion in consultants’ fees.

Figures provided by the Labour Party showed ten agencies have spent $910.5 million on contractors since 2008 while also spending $114.1 million on redundancies.

The restructuring of the Inland Revenue Department (IRD) had seen departing staff collect $31.3 million in redundancy payments before contractors were hired at a cost of $125 million.

There are further case studies reported here, but carrying on with the above coverage:

Labour’s State Services spokesman Chris Hipkins said the figures made a mockery of National’s claim that it was moving resources from the back office to the frontline.

“The public service has already lost a huge amount of valuable expertise and experience and is simply plugging the gap by hiring consultants. “This is short-term thinking and it doesn’t make sense. We must invest in and value institutional knowledge.”


While in Opposition, National was highly critical of Labour’s failure to keep consultancy fees under control.

Finance Minister Bill English said the contractors had been employed for work which the public service had neither the funding nor the expertise to do. He said specialist skills were needed for the rebuild of Christchurch, the design of the Deposit Guarantee Scheme, and on multi-billion dollar IT projects.

“We just don’t have public servants sitting around who know how to redo the 25 year-old tax collection system,” he said.

Every government needs, and has used, a certain amount of external consulting support. But mass redundancies, then hiring some of those people back as expensive consultants, and running up a billion in fees, makes no kind of sense at all. If essential expertise doesn’t exist within an organisation then the sensible alternative to redundancies and external consultants is internal professional development.

Here’s the real question for the Nats’ management of the public sector – has there been a cost/benefit analysis of professional development for existing staff vs redundancies and external consultancy? If so, let’s see it. If not, then they’re throwing money down yet another ideological drain.


12 comments on “Redundancies, consultants, professional development”

  1. King Kong 1

    The consultants would have been hired anyway (maybe not the restructuring ones).

    The civil service became gutless under Labour and no one wanted to make any decisions without a Mckinsey or Deloittes report to cover their jacksies with if it all turned to custard.

    In the civil service I would say there is a mix of scared clever people and institutionalised morons outsourcing their jobs whilst still collecting a salary.

    • Colonial Viper 1.1

      We need to strengthen the public service and root out the inconguous, low value added private sector managerialism which has taken hold.

  2. Tracey 2

    “The consultants would have been hired anyway”. Proof?

    • mike e 2.1

      last time national were in power they did exactly the smae thing sacked public servants re hired them as consultants and also hired National party hacks at exorbitant rates.
      Shipley in CHCH.
      Repeat !National got up to $800 million in consultants last time they were in powewr heading the same direction again

  3. Consultant 3

    Keep an eye out for the All Of Governement deals. Ostensibly these deals get the governement economies of scale with regard to purchasing of services across departments. In effect, several large companies are going to lock the governement into contracts that look good price-wise up front but will end up being a rort through the use of “extras”. Where a company cannot profit from a service to the government, they will, of course, just reduce the quality of their service to the point where the departments will fulfill their own requirements internally. Penalty clauses will never be enacted. Many of the smaller companies, that offered some competition, will just go to the wall.

    Witness the current out-sourcing agreements, where “hosting your old IT equipment” is sold as “move to the cloud”. We’ll come and collect all that gear, chuck it in our flash datacentre and send you a monthly invoice. Thanks. You get the same services you had, with the extra cost of hosting.

    The public lap up the reduction of public servants (almost as popular as bene-bashing), they just don’t see that the flipside is an increase in consultants because the work still needs to be done, and the cost comes from a different magical accounting pot. Where a public servant actually cares about the job they are doing, the contractor is basically a mercanary.

    I know, cos I is one.

    • Colonial Viper 3.1

      Yeah its a merry band, I used to have to work with a few from time to time. Good peeps, in general, doing work at thrice the price (although the Partners were the ones who kept most of the money).

    • tc 3.2

      The sheeple also don’t understand that a core of competant and experienced civil servants ensures the wheels don’t fall off and gov’t policy can get done more effectively.

      The Nat’s had to get rid of this troublesome lot as it would of obstructed their ‘vision’ with practical experience about how and why it needs to be done a certain way.

      NACT the party of short termism for their own long term wealth outcomes.

    • prism 3.3

      We know that consultants are people too! And very useful except at present it’s the silo pots that money is divided into – no for more staff, no money, but the work needs doing, hire a consultant at a day’s wages per hour about. And that somehow can be paid for – out of where? But that’s how it’s done folks.

    • muzza 3.4

      And imagine what the rort looks like when its applied across the local govt sector etc!

      Yeah the consultants certainly rule the roost inside most departments of the “super city”, thats for sure.

      Consultants running “transformational activities”, simply translates into consultants ensuring their troughing into the future. All hired by consultant mates of course, because the working history of relationships is very easy to establish in little “non corrupt” NZ!

      Who loses, we all do of course, even the consultants, they just don’t understand the negative impact still applies, just on a time lapse.. While a little slower, the pain will arrive on their doorstep too!

      Its the world we live in sadly!

  4. lenore 4

    we are being restructured at the moment after a consultant was brought in – they obviously didnt know how we operate and the rationale is really flimsy.

  5. Where are the publicly-available ‘Registers of Interest’ – that help prevent untoward ‘conflicts of interest’ between those hiring these ‘consultants’ and those ‘consultants’ who have been hired?

    Penny Bright
    ‘Anti-corruption campaigner’


  6. Lanthanide 6

    Seems to me that Labour should do as ACT proposed – put a law in place to cap government spending. Except Labour’s version would be to cap spending on consultants, and if the government wanted to increase spending on consultants, the minister of finance would have to front in parliament to receive permission to do so.

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