NZ officials suggest creating in-house consultancy hub for government  

By on 12/02/2024 | Updated on 12/02/2024
Minister Nicola Willis. Photo via Wikimedia Commons

Senior officials in the Public Service Commission of New Zealand have proposed creating an “in-house consultancy hub” to ease reliance on external consultants as part of the government’s cost-cutting plans.  

The National Party, which came to power late last year as part of a coalition government, has set out plans to make cost savings of at least 6.5% across government.

In its briefing to new minister for the public service, Nicola Willis, released earlier this month, the Public Service Commission said it would “welcome the opportunity” to discuss a range of possible interventions, including “a more structured mobility model that facilitates deployment and re-deployment to priority work areas, or an ‘in-house consultancy hub’ that looks to deploy high-capability resources into major projects that could otherwise rely heavily on external consultants”.

A graph in the briefing shows that expenditure on contractors and consultants had risen to just over NZ$900m a year to June 2023. Though down slightly on the previous year, this was up from just shy of NZ$600m in 2018. The latest figure equates to 13.1% of total workforce spend.

National campaigned on cutting spend on external contractors and consultants by NZ$400m a year.

Read more: New Zealand set for public service headcount reductions as National Party moves to form government

Officials in some government departments have highlighted that reducing reliance on consultants would be particularly challenging in certain areas. For example, the briefing to new minister for digitising government, Judith Collins, said that sector spending on contractors for major digital projects “contributed significantly” to overall contractor spend throughout 2022 and 2023. “In the short to medium term, it will be challenging to unwind government’s reliance on digital contractors due to the specialist nature of and high industry demand for digital talent,” it said.

The Public Service Commission added in its briefing that there were opportunities to better utilise the public service workforce “by ensuring that people with scarce skills are able to move to where they are most needed”.

“There is a need for mechanisms ensuring that… people and their skills can be flexibly deployed to where they are most needed, regardless of agency boundaries,” it said, adding that this could reduce competition between agencies for talent, further saving costs.

Hiring freezes a ‘blunt instrument’

New Zealand’s Public Service Association said last month that public sector cuts targeting government departments and agencies would have a long-term negative impact on the country. The Association’s assistant secretary Fleur Fitzsimons said reductions would specifically “undermine the ability of the government to implement evidence-based policies”.

The Commission acknowledged that in the current economic environment “active approaches” are required to ensure public resources are aligned with government priorities “without compromising high-quality services for the public”, and that other ways to “become more efficient and productive to address the need for fiscal restraint” included “setting clear priorities and focusing strongly on performance and capability, transforming services, and better aligning agency functions”.

It said that “in general” it did not recommend the use of caps or hiring freezes as an effective means of reprioritising resources. “These tend to be blunt instruments, which can lock in resource allocations not aligned to your priorities, set perverse incentives or create upwards pressure on contractor and consultant spend, and give you less deliberate choice about which programmes you invest in,” it told the minister.   

Read more: Turmoil ahead: will the pendulum swing again to change New Zealand’s public sector?

Cutting back its use of contractors and consultants is also a priority of the Australian Public Service. The federal government established Australian Government Consulting, its new state-run consultancy arm, last year in a bid to “reduce [government’s] over-reliance on external consultants”.

Slow economic growth globally is putting pressure on governments to tighten their belts with many having announcing public spending and workforce cuts in recent months. For example, the Canadian government has announced a C$500m (US$362m) in-year spending cut in the first step of efforts to save up to C$15.4bn (US$11.5bn) over five years, while in the UK, chancellor Jeremy Hunt has capped the size of the civil service as part of a renewed effort to reduce the number of officials to pre-pandemic levels.

Read more: Australia makes key hires to new government consulting function

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About Mia Hunt

Mia is a journalist and editor with a background in covering commercial property, having been market reports and supplements editor at trade title Property Week and deputy editor of Shopping Centre magazine, now known as Retail Destination. She has also undertaken freelance work for several publications including the preview magazine of international trade show, MAPIC, and TES Global (formerly the Times Educational Supplement) and has produced a white paper on energy efficiency in business for E.ON. Between 2014 and 2016, she was a member of the Revo Customer Experience Committee and an ACE Awards judge. Mia graduated from Kingston University with a first-class degree in journalism and was part of the team that produced The River newspaper, which won Publication of the Year at the Guardian Student Media Awards in 2010.

One Comment

  1. Grant Douglas Boston says:

    What’s the difference between in-house consultants and departmental advisers?

    NZ might get some efficiencies by developing all-of-government resources/services for things like economic analysis, environmental reports etc instead of asking each department to do their own.

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