MBIE said it has a "continued focus" on reducing reliance on contractors. Photo / Mark Mitchell
MBIE said it has a "continued focus" on reducing reliance on contractors. Photo / Mark Mitchell
Finance Minister Nicola Willis is claiming victory in her war against consultants, with new data showing taxpayer money spent on the big four consultancy firms has been dramatically slashed.
The amount mega-ministry Mbie paid to Deloitte, EY, KPMG and PwC has fallen 63% in the spaceof a year.
The Ministry of Business, Innovation, and Employment paid out $7,119,817.57 to the four firms in the 2022/23 financial year.
A year later, that spend plummeted to $2,632,894.55 in total, for consulting services — such as delivering reports and conducting market research.
Willis, who is also Economic Growth Minister, believed the major reduction signalled fiscal responsibility, and saw the finances as a job well done.
“The consultant gravy train is well and truly over and Mbie have made big changes in the way that they rely on third parties to deliver advice,” she told NZME.
She said these savings had allowed the Government to deliver tax cuts and ensure the Government was putting more funding into health, and education — “the really vital priorities”.
Finance Minister Nicola Willis is celebrating an end to what she calls "the consultant gravy train". Photo / Mark Mitchell
Willis made another commitment around future consultancy spending.
“My expectation is that we will not allow that [spending] number to creep back up to the levels that it was under the Labour Government.”
She said it was important to note spending on the big four did not account for the entirety of departmental spending, but confirmed its overall spend “dropped from $104 million to $66 million a year” under the Government’s watch.
The minister added she had become “uncomfortable” with growing dependence on external providers from public sector agencies — and was “not going to put up with the spiralling costs” for contractors and consultants.
In the 2017/18 Financial year, the Government spent $3.4 million on the consulting services of the big four.
That rose to just above $4 million in the 2018/19 financial year, staying relatively stagnant in 2019/20.
The figure continued to climb, reaching more than $7 million in the 2020/21 before jumping to its highest level to date in 2021/22 — where MBIE spent a total of $9.8 million on contractors and consultants.
Mbie said much of this close to $10 million spend was on its work during Covid-19 pandemic, which included resourcing managed isolation and quarantine facilities.
In a statement, Mbie said some spending for contractors and consultants was still needed — specifically around ICT programmes, and when required for emergency situations.
A spokesperson said the department used contractors and consultants for short-term projects, where it does not have the in-house capability.
At the formation of the new Government, Willis issued a directive around spending restraint — telling public sector agencies to find cost savings of between 6.5% and 7.5%, as well as reducing their reliance on contractors and consultants.
Thousands of roles have faced the axe since the directive, as many Government departments eye years of savings. Mbie specifically went through a voluntary redundancy scheme, alongside disestablishing roles and putting a temporary recruitment pause in place.
The Ministry of Business, Innovation and Employment was given the highest cost-saving task before the release of Budget 2024.
Further data released by the Commission in December signalled a similar financial path was still being paved into 2025. At the time, the Government laid out an expectation to save $800 million over two years, added to the 2023/24 cost savings.
Months before the 2023 general election, the then-Labour Government announced plans for public sector savings of between 1% and 2%, alongside a bid to bring contractor and consultant spending back to pre-Covid levels.
Willis also believed the reduced reliance on firms would help build the capability of the public service itself.
She said such a significant reduction in spending showed “with leadership, and a culture of restraint, you can change spending patterns with Government agencies”.
Azaria Howell is a Wellington-based multimedia reporter with an eye across the region. She joined NZME in 2022 and has a keen interest in city council decisions, public service agency reform and transport.
