Public service job cuts likely to lift consultant bill, experts say

Wednesday, 27 March 2024

If the magnitude of job cuts announced last week continues, the Government may end up spending more on consultants, experts warn.

Last week job cut proposals rocked Wellington with the Ministry of Health floating a 25% cut in staff numbers and 384 jobs to go at the Ministry for Primary Industries. The Ministry for Business, Innovation and Employment had 111 applications for voluntary redundancy and has extended the process to include more work areas.

More job losses are on the way, but departments and agencies are staying tight lipped until final proposals are ready.

Fleur Fitzsimons, assistant secretary at the Public Service Association, said the cuts were “random and dangerous” because of the blunt 7.5% savings target set by the Government, which the public service was trying to meet before the Budget.

“We will lose talented people to consultancies where they may well end up doing work for the public sector as well as to Australia where wages are higher. It does not make sense.”

Last week Bridget Clarke, senior director at the Wellington branch of recruitment agency Robert Walters, warned that people leaving could mean the city simply did not have the skilled workforce to fill the public sector positions when the Government needed to deliver on its programme of work.

Experts said further increases to numbers of consultants were a likely outcome, as the Government tried to deliver on major changes with a public service in the midst of a restructure process.

“It’s very clear that there is a merry-go-round,” said Dr Barbara Allen, an associate professor in public management at Te Herenga Waka – Victoria University. “Inevitably people go into consulting and consultant numbers go up. It’s well known around the world that this pendulum goes back and forth.”

If the Government was trying to reduce consultant numbers at the same time as public servant numbers, “there’s going to be a lot of work that can’t be done”, Allen said.

Though cutting staff numbers in the public service was an appealing option for short-term savings, it often had unintended consequences – leaders of ministries and agencies would be trying to make the best decisions they could, but it was hard to anticipate what the effects of cutting jobs would be or which jobs would affect the so-called “frontline”.

Public service numbers had increased significantly through Covid-19 lockdowns as more work was created for the health response, public communication and support for businesses.

“I wouldn’t call it a bloat, I would call it a response to a crisis that was necessary at the time. There’s always reason to go back and think: what are we doing? Are we doing the right things and efficiently?” Allen said.

Professor Jonathan Boston, chairperson of Victoria University of Wellington’s School of Government, said if cuts of the magnitude announced last week continued, it would not surprise him if the Government found itself in a position where consultants were needed.

“By virtue of wanting to make significant cutbacks quickly, the Government is going to have significantly less capability to do things, because so much energy is going to be devoted to reorganisation and restructuring,” Boston said.

This magnitude of change to the public service had not been seen since the Fourth Labour Government privatised several government entities in the mid to late 1980s, he believed.

“What is becoming clear is that we are entering a very different period of public sector management,” Boston said.

“What's happening now is a very significant reduction in real levels of public expenditure across a very substantial part of the public sector.”

In recent decades the public service had steadily increased in line with population growth, and to keep up with technological advances, but the Government’s plan was a reversal of that.

There may be a “grain of truth” in the political message that the public service was bloated, but Boston pointed out that the size of New Zealand’s public service was consistent with the OECD average.