New Māori Health Authority spending over $1 million a month on consultants and contractors

Health Minister Ayesha Verrall said the reliance on external firms was “appropriate for setting up Te Aka Whai Ora as a new organisation". Photo / Jed Bradley

The Māori Health Authority (Te Aka Whai Ora) is spending more than $1.15 million a month on contractors and consultants, newly released figures show.

Established on July 1 last year, the agency spent $9.2m on contractors and consultants in its first eight months. The Crown entity’s full Budget appropriation for the financial year is $535m, funding that includes the health services it commissions.*

Close to $4m was paid to staffing agencies, which supplied contract staff to fill roles, including administrators, policy advisers, human resources staff and managers of various descriptions.

Staffing agencies often charge out their staff at roughly double the rate the government pays its own employees.

Staffing agencies used included Niche Consulting Group ($1.24m), Inside Recruitment ($597,284), Robert Walters New Zealand ($543,189), The Johnson Group ($539,406), H2R Consulting ($513,200) and JacksonStone & Partners ($336,112).

In addition to staffing agency workers, consultants were also seconded to do day-to-day work. Te Amokura Consultants provided administrative support, programme managerial services, and commission and risk advisory services ($612,580).

By comparison, the authority spent $7.33m on employees over the same period. A spokesperson said using contractors was a “temporary measure” and was necessary, especially earlier in the fiscal year, to set up corporate systems and processes, commission new Rongoā Māori services (traditional healing) and recruit permanent staff.

Te Aka Whai Ora currently has a communications team of seven: two are employees and five are contractors.

The single largest chunk of consultant spending went to management consultancy PricewaterhouseCoopers; it was paid $1m for “advisory services” that included strategy development, review of financial processes and budget development.

The spokesperson said it had required “specialist expertise to build our organisation and team in a tough employment market” and emphasised that the new agency had to begin work with only a single staffer, chief executive Riana Manuel, supported by a “small interim team with the right specialist skillsets”.

The figures for consultant and contractor spending were obtained by Act through written parliamentary questions.

Act deputy leader Brooke van Velden. "What we need is a focus on the real-life concerns of New Zealanders,” she said. Photo / Mark Mitchell

Act deputy leader Brooke van Velden said the agency was “spending up large” on consultants and contractors who were providing “recruitment and back-office stuff”, rather than spending money on front-line health work.

“We’re seeing a huge increase in the number of people on wait lists and so many New Zealanders can’t get elective surgeries, we need midwives in rural areas, there are whole towns without a GP … What we need is a focus on the real-life concerns of New Zealanders,” she said.

“The focus needs to be on delivering basic healthcare to New Zealanders, not spending on more administrative change.”

The authority’s purpose is broadly to provide policy and strategy advice on Māori health, undertake workforce development and commission health services. The agency was one of the recommendations of a 2020 review of the health sector, in light of poor Māori health relative to the broader population. However, its powers go considerably further than was recommended by the review.

Act contends that the creation of a separate Māori authority fuels bloated bureaucracy and race-based division. Both Act and National have said they would scrap the authority in favour of a single public system, should they be given the opportunity to form a government.

Health Minister Ayesha Verrall emphasised that the authority was just nine months old. Photo / NZME

Health Minister Ayesha Verrall said the reliance on external firms was “appropriate for setting up Te Aka Whai Ora as a new organisation to improve hauora Māori [Māori health] where the health system has not served them well.”

She emphasised that the authority was just nine months old and that it had passed “a number of key milestones”, including the establishment of an incident management team in the wake of Cyclone Gabrielle.

The authority, however, did not start from scratch last July. It was preceded by an Interim Māori Health Authority, established in late 2021, and a Health Transition Unit, established in late 2020 and housed within the Department of Prime Minister and Cabinet (DPMC).

The transition unit’s purpose was to fledge the new twin agencies the Māori Health Authority and Health NZ (Te Whatu Ora), into which most district health board functions were placed.

The unit spent $28.5m in the run-up to June 2022 in preparation for the establishment of the new agencies. Some 64 per cent of the money ($17.32m) was spent on contractors and consultants, the lion’s share of which went to Ernst & Young.

The DPMC unit also has a budget of $10.43m for the current fiscal year. It’s not clear how much of that money was spent before the work was folded into the new health entities at the end of September.

The high public sector spending on outside help is something Labour vowed to curb when it came to power. The spending, however, has risen considerably.

In 2018, then State Services Minister Chris Hipkins, now the prime minister, abolished a cap on public servant numbers because he said it had perversely fed an increased reliance on expensive contractors and consultants.

“... This Government wants to see the public service rebuild their in-house capability and invest in permanent and long-term staff, rather than spend millions on temporary contractors,” he said in a press release at the time.

Public Service Commission figures show that spending on consultants and contractors by the core public service rose by 33 per cent over the four years to fiscal 2021-22.

* This story has been updated and corrected. It previously stated that contractor and consultant spending constituted more than more than 40 per cent of the authority’s Budget 2022 appropriation (adjusted for the period).