Red Alert

Consultants and contractors

Posted by on April 11th, 2012

Keith Ng has been digging around the issue of government use of consultants. He’s unearthed some stats that show the use of consultants within the public service has increased under National, despite their promise to bring greater efficiency to public services.

This was inevitably going to be one of the consequences of National’s arbitrary ‘cap’ on the number of people employed by the public service. If government departments aren’t allowed to employ new staff, but still have to do the same amount of work, or in some cases even more, what will they do? They’ll contract the labour in, and it looks like that’s what’s happening.

As Danya Levy’s story on Stuff reminds us, last month the Defence force had to admit that it had rehired two Navy staff just weeks after making them redundant after it was unable to fill their roles. The more arbitrary cuts National inflicts, the more of this we’re going to see.

I’ve blogged before that I support a greater focus on efficiency and outcomes within the public service, but the National government are doing things back to front. They’re too focused on what they can cut and what they can sell, rather than reviewing what they actually want the public service to deliver. That’s where there attention should be focused.

13 Responses to “Consultants and contractors”

  1. Spud says:

    ๐Ÿ‘ฟ !!!!!!

  2. ghostwhowalksnz says:

    EQC is getting robbed blind by its contractors.

    They have ended up having contractors to run all its contractors, clipping the ticket as they go.

    The jobs are even done offshore rather than NZ , at higher Australian rates.

    For some work, competive bidding and variations make contractors a good idea, but just running regular steady work through a contractor is just burning money.

    I remember seeing that in the UK , going from in house railway maintenance to private contractors doubled the cost. For major construction and rebuilds it was even higher

  3. Annette king says:

    Housing NZ is an example of a government agency making front line staff redundant and replacing them with contractors and consultants. 70 jobs about to go, to be added to the 92 who have gone since 2008. Contractors and consultants have gone from 274 in 2008 to 459 in 2010/11. All the while John Key and Bill English are pulling the wool over NZer’s eyes about their public sector ‘restructuring’. Some will have a sense of deja vu having watched the same pattern in the 1990s.

  4. Spud says:

    @Ghost – Bleep me, Australia? ๐Ÿ˜ฎ

    @Annette – ๐Ÿ‘ฟ !

  5. Jack Ramaka says:

    What happened to common sense, I would love to read all the reports produced over the last 30 years, i bet there are a number of repeats with the same reports giving different answers.

    Just one big gravy train with the same people licking up the cream.

    Know wonder this country is heading down a dark slippery slope, parasites sucking the lifeblood out of the country.

    Assets being sold to fuel consumption.

  6. tracey says:

    What was the saving from the redundancies or not replacing people who left?

  7. Charlie says:

    I know personally of someone made redundant and hired back immediately as a contractor on much more money. They commented that working environment is chaotic with contractors not working as a team. Very depressing.

  8. softstarter says:

    Does this have something to do with dodgy accounting? Use of consultants and PPP exploded in the UK under labour, one of the reasoning behind this was to keep spending off the balance sheet. So, thinking that the government can spin success by removing people from the ‘books’ but still keeping the wheel spinning. Just a thought.

  9. Gregor W says:


    There are lots of accounting ‘benefits’ wrt employing contractors over perms.


    1. Reducing HR overhead (PAYE, holiday pay, severance terms)
    2. Capping OPEX
    3. As the contractor / employer transactions tends to be business to business, labour can often effectively be tax deducted and capitalised (IT development for instance)

  10. ghostwhowalksnz says:

    Gregor, tax deductions for government departments ?. Apart from GST I didnt think they paid any tax.

  11. Gregor W says:


    I’m not sure tbh.
    I’m pretty sure they do have asset depreciation etc. though.

    It was more of a general statement rather than specific to govt.

  12. Spud says:

    Hi Ghost! ๐Ÿ˜€ ๐Ÿ˜€ ๐Ÿ˜€ ๐Ÿ˜€ ๐Ÿ˜€ !