The Government is pushing to cut spending on contractors and consultants in core areas, but money is still pouring out of non-core areas, according to the latest figures.
Police and NZ Transport Agency Waka Kotahi (NZTA) spent almost a quarter of a billion dollars between them on contractors and consultants in 2022-23, their annual reviews to Parliament show.
This was a rise of almost 50 per cent for each of them - with police spending up to $135 million, while NZTA spent $112m.
The extra outlay of more than $80m is equal to about a fifth of the entire $400m in savings the Government has promised in this area.
While it has ordered those savings to come from about 40 core agencies, non-core areas such as the police, the Transport Agency and Health New Zealand Te Whatu Ora are still big spenders, with all of them facing rocketing bills for IT projects that often need the kind of outside expertise that Public Service Minister Nicola Willis wants to see less of.
Willis was travelling to the United States and unavailable to comment to RNZ.
Te Whatu Ora has made a “significant reduction in contractors”, it said in its first annual review, with spending dropping from $130m to $95m in the past calendar year, and hire numbers dropping by a fifth.
“We do not have national-level validated data on our consultant workforce as these numbers can fluctuate within the contracts or projects involved,” said acting chief people officer Sue Gordon in a statement.
It is not clear how these figures related to Te Whatu Ora spending $700m last year on outsourced people and services, with half a billion spent on non-clinical costs. The agency is playing catch-up after inheriting poor data - and a number of contractors - from the Health Ministry.
Police spending
Police Minister Mark Mitchell wrote a letter to the Police Commissioner, telling him to rein in the outsourcing spending.
“I expect police to develop an organisation-wide programme to identify efficiencies and back-office savings and ensure these are invested back into enabling frontline policing services... I expect police to be actively reducing its expenditure on contractors and consultants,” Mitchell wrote.
Police Minister Mark Mitchell. Photo / Mark Mitchell
The police annual review responded: “The impact of this letter of expectations on ongoing work programmes, priorities and strategic objectives has not yet been quantified.”
Police would need to make a sharp U-turn to meet this expectation, with the number of hired contractors and consultants rising from 990 two years ago, to 1300 last year.
Police have 19 IT projects under way, worth $190m, with costs rising fast. Their part in the public safety network project has almost tripled to $14m, and a mobility digital project has jumped from $21m to $33m.
“The significant increase in total cost over the last couple of years largely relates to additional funding appropriated for programmes including Next Generation Critical Communications (NGCC), Arms Safety and Control, Tactical Response Model - Increasing Frontline Safety, and ReFrame - the service delivery transformation programme,” police said in the annual review.
Many of their IT projects, and the costs associated with them, are slated to go on for years, including the $700m, 10-year firearms licensing overhaul that employed 67 contractors.
The police hate-crime team has more contractors than staff in it - seven versus five - and also spent $1.2m on public relations contractors, about twice as much as before.
IT on the road
NZTA also largely put its high spend on IT issues and “requiring specialist skills reflecting the significant scale and complexity of these programmes”.
Talent was tight, turnover was up and it was hard to keep skilled people, it added.
It has massive tech spends under way, including a $1.3 billion national ticketing project and $159m speed-safety camera one, where it has paid consultants PWC up to $2850 a day.
The camera project was under budget, the agency told RNZ: “NZTA has made judicious use of contractors and consultants noting the one-off nature of much of this work and the need to tap into specialist and advisory expertise, both in New Zealand and overseas.”
Both Health New Zealand and NZTA have brought in more checks on who gets a contract, and shorter contracts. NZTA contracts are for a year, with any extension requiring more sign-offs.
Health bosses had been having trouble keeping track of if they were paying too much or getting bang for their buck, and were working on that, papers say.
NZTA also has a new “rate card”, showing how much to pay for what, and has managed to halve what it pays PR-communications contractors to $4.7m last year.
But at Health New Zealand, 38 contractors were among about 200 people doing communications work. Nine were paid between $150,000 and $200,000, and 10 between $100,000 and $150,000.
The reviews showed health bosses got the message from the Government about reining things in.
But NZTA said: “At this time, we have not received written directions on these matters from the Minister of Finance.”
