State Services Minister Chris Hipkins has removed a cap on core public servant numbers he says caused a $272 million blowout in consultant fees paid by government departments over 10 years.
The decision is a huge win for the Public Service Association, which has about 63,000 members working in central government, state-owned enterprises, local councils, health boards and community groups. While work for consultants has surged in the past five years, the size of public sector has barely budged, rising 1.5 percent between 2013 and 2017 to reach 348,000 as at June 30 last year, accounting for 13.8 percent of the country's total employed workforce, which grew 14.9 percent in the same period, according to the State Services Commission.
"This is a big win for PSA members, who asked for a commitment from Labour to lift the cap," PSA national secretaries Glenn Barclay and Erin Polaczuk said of Hipkins' announcement last week. "The government has followed through on that promise."
Barclay and Polaczuk said the previous government hadn't seen a link between a cap on the public service and "the massive growth in contractors and consultants." The public service cap was "relegated to the dustbin of history," they cheered last Friday.
The $272 million blow-out on consultants would fund 272 public servants on $100,000 a year for 10 years. The outcome for a high-profile leaker, or whistleblower, at the Ministry of Business, Innovation and Employment who released MBIE spreadsheets to show how the super-ministry was under-stating its use of consultants, is less clear.
In February, MBIE said it had narrowed down the identity of the leaker to 19 employees with access to the spreadsheet and was "currently working through an employment process and are unable to comment further while that is underway." Last week MBIE said it has since concluded its investigations into the leak, which was "an individual employment matter and as such the outcome is confidential."
It was also Hipkins who in February initiated a review of the protection of whistleblowers under the Protected Disclosures Act, saying at the time it was "crucial that employees feel safe to report cases of serious misconduct" and not have to worry that their role, reputation and career development could be jeopardised.
In April, the leaker was name-checked in a broader review by former senior public servant Wendy Venter on MBIE's answers to parliamentary select committees about consultants and contractors. Venter concluded that even though the ministry followed the patterns of previous years, its 2015/16 answers "were not as clear, full and transparent as they could have been about the ministry's spending on consultancy and contractors." And the reasons for doing so were "not a sufficient basis for excluding these costs."
For example, it gave $38.9 million as its spending on consultants and contractors, excluding $20 million in operating spending on ICT contractors. Also excluded was $4.6 million spent on contractors at less than $60/hour and $13 million which was capitalised to capital projects. As a result of the review, the ministry made changes to the way it responded to the same questions in the 2016/17 annual review, which the Venter report said had "substantially improved the transparency, comprehensiveness and understandability of the information provided."
"MBIE has always responded to parliamentary select committee questions in good faith and in line with the available guidance, but we recognised that we could make improvements to increase consistency and transparency, and make the complex information provided easier to understand," an MBIE spokeswoman said. "We use contractors and consultants for projects and to cover peak demand where it’s economic or necessary to do so, but we also want to be really transparent about that and we’ll continue to make enhancements wherever we can."
The spokeswoman reiterated that MBIE doesn't condone the unauthorised release of sensitive information. Staff who were concerned about the way MBIE did business should use its anonymous 24-hour 'integrity line'.
The Venter report said MBIE's situation could be used to a wider good in the public sector and that agencies would welcome central government policy guidance, since a broader look at the public service had shown that three state entities - Inland Revenue, Internal Affairs and the Ministry of Social Development - all opted for a different interpretation of disclosure rules when giving their parliamentary answers. Two included both capital and operating expenditure in their value of consultant services and all three used different thresholds for individual contracts reported.
MBIE was formed in 2012 from the merger of the Ministry of Economic Development, Ministry of Science and Innovation, Department of Labour and the Department of Building and Housing. According to Venter's report, government agencies spend about $41 billion a year buying goods and services from third-party suppliers.
MBIE spent a total of $95.8 million on consultants and contractors last year, up from $76.9 million in 2015/16, according to Venter's count. The ministry spent a further $48 million on professional services including legal, medical and adjudication.
Hipkins said on Friday that the government wanted the public service "to rebuild their in-house capability" and invest in permanent and long-term staff "rather than spend millions on consultants."