Revealed: The ‘appalling’ amount of government spending on entrepreneurs and who is reaping the rewards

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New Zealand Parliament Buildings near Lambton Quay.

The government spent nearly $ 1 billion on contractors and consultants in the past fiscal year.

A Newstalk ZB The survey can reveal that while that figure is down from the previous year, to $ 939 million, it is still tens of millions of dollars more than in 2017.

Nearly 50 Official Information Act (OIA) requests reveal that hundreds of millions of dollars have been spent on public sector recruiting.

Large companies such as Beyond Recruitment, Madison Recruitment, Momentum, and H2R Consulting have made millions from government spending in this area.

According to the information ZB was able to get it, Robert Walters NZ appears to be one of the government’s favorite clients – earning around $ 40 million from contracts in 2020/21 alone.

However, that number could be higher, as a number of large departments, such as the police and the foreign ministry, refused to provide the same information as almost every other government department.

Robert Walters Managing Director Shay Peters said the company is “a proud supplier to the New Zealand public sector” and is one of 45 government recruiting providers.

Civil Service Minister Chris Hipkins has admitted he would like to see less use of consultants and contractors in the future.

And he made special mention of the money spent on recruiting.

“Obviously, I would prefer government departments to spend less on recruiting. “

Many contracts relate to IT and construction, which is normal.

The Education Department, for example, spent $ 176 million on contractors and consultants in fiscal year 2020/21, much of which appeared to be on school maintenance and construction projects.

- POOL - Photo by Mark Mitchell.  Civil Service Minister Chris Hipkins.
– POOL – Photo by Mark Mitchell. Civil Service Minister Chris Hipkins.

But the opposition is scratching its head on other areas of spending.

The conservation department [DoC], for example, paid Inside Executive Recruitment $ 362,343 to “provide strategic and technical support to [the] OIA and Ministerial of the Ministry “.

The DoC spent an additional $ 121,710 for the same company to provide “OIA support services”.

There are hundreds of other examples in the information discovered by ZB.

Hipkins said the government was actively working to “rebuild the core capacity of utilities” so that they are less dependent on contractors in the future.

“It’s better for the people doing the job because they get more stability and it’s also better value for the taxpayer.”

But the opposition is not happy with the almost $ 1 billion spent each year by entrepreneurs.

National civil service spokesman Simeon Brown said the numbers show government spending is out of control when it comes to the civil service.

National public sector spokesperson Simeon Borwn.  Photo / Mark Mitchell
National public sector spokesperson Simeon Borwn. Photo / Mark Mitchell

He said taxpayer dollars should be spent on important front-line services, not on “skyrocketing backstage offices.”

Act leader David Seymour said the amount of money spent on some of these individual contracts would be “exasperating for the Kiwis who pay taxes to make it happen.”

Hipkins, however, said National and Act’s position “is a bit confusing.”

“When they were in government, they placed an arbitrary cap on the number of people the public sector could employ, which led to an explosion in the number of people hired as consultants – ultimately costing the function more. public. “

In 2018, the government lifted this cap to reduce its dependence on contractors and consultants.

Figures provided by the Civil Service Commission show that in the year 2017-2018, contractors and consultants represented 13.4% of the government workforce.

This number was 12.8% in 2018/19, 11.3% in 19/20 and 10.3% in the last fiscal year.

During the same period, the total amount spent on contractors and consultants increased – except for this year when it decreased.

In 2017-18, some $ 900 million was spent; $ 923 million the following year and $ 968 million in 2019/20.

But, according to a spokesperson for the Civil Service Commission, the Commission “never said that the actual sums spent [on consultants] would be reduced “.

“It’s about getting the right mix of the public service workforce, finding the right balance between the number of full-time employees and the number of contractors and consultants.
“We are doing this.”

Act leader David Seymour during his stand-up before Question Time.  Photo / Mark Mitchell
Act leader David Seymour during his stand-up before Question Time. Photo / Mark Mitchell

The Ministry of Education was the biggest spender, spending $ 176 million.

The IRD spent $ 111 million, the Department of Social Development $ 95 million and the Department of Enterprise, Innovation and Employment spent nearly $ 65 million, according to figures from the ‘OIA provided to ZB.

Kāinga Ora spent $ 56 million, the Ministry of the Environment spent $ 49 million, and the Ministry of Health spent $ 44 million.

When asked why the Department of the Environment was spending more on contractors than the Department of Health – which was handling the Covid response – Hipkins said a lot of work was needed to consult on the RMA.

“Competent people [in this area] are expensive and often operate on an entrepreneur and consultant model.

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