Spending up on public service contractors, consultants

Saturday, 16 December 2023

The latest Public Service data shows an increase in the workforce and almost $270 million spent on contractors and consultants in the September quarter, as some agencies ready plans to slash spending and halt hires ahead of the Government’s mini-Budget.

Quarterly data released from the Public Service Commission shows in the three months to September 30, the public service spent $269.5m on contractors and consultants.

Of that, $180m was on operational expenditure and $89.5m was on capital expenditure. Capital expenditure goes towards developing assets of the agency, while operational expenditure goes towards the everyday running of the agency.

That was a 10.3% decrease, as a share of the workforce spend.

For comparison, in the year to June, overall spend on contractors and consultants increased by 2%, up to $1.27 billion overall.

The biggest operational consultant and contractor spenders in the three months were the Ministry of Education at $23.3m, the Ministry of Social Development at $22.8m, Ministry for Business, Innovation and Employment at $19.7m and the Department of Internal Affairs at $17.5m.

In the three months to September 30, there was an increase in the workforce by 1.8%, or 1105 full-time equivalent staff (FTE).

On top of the former government’s plan to cut contractor and consultant spending in the public service by $165m a year, National is taking aim to the tune of $400m a year, with expenditure caps to be introduced next year.

Earlier this year, the Labour government announced a permanent requirement to tighten belts by cutting 1% or 2% from baselines. In addition, the coalition Government wants an average 6.5% savings dividend from across the public service.

The Post reported more agencies were stopping the majority of recruitment for vacant roles, such as the Department of Conservation (DOC) and the Ministry for the Environment, which is working through a review that will result in a 25% reduction in senior leadership.

Ten staff members were made redundant at the Ministry for Pacific Peoples, after a new organisational structure came into effect in October 2023.

Earlier this week, Public Service Minister Nicola Willis said she had been “working with Treasury and with the Public Service Commission on our plans to ensure that we are reducing low value spending across the public service”.

She said she would have “further announcements to make about that in the coming days”.

Willis had not been given any advice on how many public service workers may lose their jobs before Christmas. She said she would not be asking for that, in light of the mini-Budget which will be released next week.

“What I am focused on is asking public agencies to make savings and reprioritisation consistent with our goals. When they do that, I expect them to do that in ways that comply with all of our employment obligations and laws.

“One thing I have been somewhat frustrated by is that we had the previous government commit that it would reprioritise half a billion dollars of government spending across government and that they had set targets for government agencies to find those savings. It appears to me that that work was barely progressed.”

In response, Labour’s public service spokesperson Ayesha Verrall described Willis’ tax cut promises as “unrealistic”, and that “severe public sector cuts will hit the Wellington economy”.

“Public sector workers have rights and provide important services, so cuts shouldn’t be undertaken recklessly.”

Between 2022 and 2023, the Public Service workforce grew by 4.5%. That included an 8.7% increase in policy analysts, an 11.3% increase in ‘information professionals’ and a 5.4% increase in managers - which was the slowest proportional growth to managers since 2017.

ICT professionals and technicians were up by 12.1%. The biggest occupational areas were social, health and education workers, and inspectors and regulatory officers.

In March, then Opposition leader Christopher Luxon suggested some health communication staff could be a good place to start in decreasing the public service.

Of the overall staff numbers across the public service, communications staff made up 0.8%, with 513.5 full-time equivalent staff September 30. That was up by 3.5 FTEs since March this year.

The biggest increases were at MBIE (up 451 FTEs/7.7%), the Ministry of Justice (up 271 FTEs/6.4%), the Ministry of Social Development (up 271 FTEs, or 3.1%) and the Department of Corrections (up 261 FTEs/2.8%).

Proportionally, the biggest increases were at the Ministry for the Environment (up 21.9%/182 FTEs) and the Ministry of Housing and Urban Development (up 20.9%/66 FTEs).

Eleven agencies had decreases, which included an 18.2% drop at the Ministry for Ethnic Communities and a 12.9% drop at Customs.