In brief
- Spending on consultants has more than doubled since the current government took office.
- A number of recently cancelled projects mean millions of dollars spent on private sector consultants is essentially wasted.
- Every single week nearly $20 million is spent on consultants by the current government, $1.244 billion every year.
Small changes for big money
Spending on consultants has more than doubled since the current government took office. The recent change of prime minister as well as Labour’s shift to a more conservative brand, has seen a slight shift in policy and a refocus on the projects now being delivered by the Labour Government.
The recently canceled projects means much of the millions of dollars spent on private sector consultants is wasted.
The now canceled TVNZ merger is perhaps the most prominent recent example. Costing taxpayers in excess of $16m before it was scrapped. Critics say it shouldn’t have cost as much as it did, and many much bigger private businesses complete mergers for far less than the estimated $370m. Perhaps this is because incentives to perform mergers and acquisitions efficiently are far different in private business?
An exhibition of waste
Adding to the waste, the Auckland Light Rail project – which may soon be canceled– spent over $44m on consultations up until late 2022. In addition, more than $21m was spent by government agencies Waka Kotahi and Kainga Ora on the project. Auckland Council also contributed to the bill with admin costs.
Similarly, the government spent over $51m on consultants for the now axed Auckland Harbour walking bridge project, a project that, like the extraordinarily expensive Light rail, seemed doomed right from the get go.
The consultation spree continues. Waka Kotahi and Wellington City Council spent $47m on consultants, who – for that cost- were only able to deliver one pedestrian crossing.
Many government departments – despite claiming they are keeping an eye on consultant related costs- are still spending an increasing amount.
The Ministry for Pacific Peoples and the Education Review Office both showed large increases in spending on consultants over the last 5 years, 244% and 154% respectively.
Similarly for the Ministry for Culture, spending on consultants has increased 700% since Labour took office, much of the bill being allocated to COVID response.
The controversial Three Waters reforms incurred a bill of $600k for advice on designing propaganda to sell the reforms to the public. And as we previously reported, the IT systems required as the reforms are being implemented, is estimated at nearly $660 million.
It all adds up
All added up, nearly 20 million per week is spent on consultancy by the current government, $1.244 billion every year.
Criticized by the National Party last year, then Public Service Minister Chris Hipkins said the Government would focus on making departments less reliant on outsourcing to contractors.
Does the Government’s reliance on the private sector suggest a failure of government departments to handle work in house, or is it perhaps indicative of a growing culture among public servants and business people to leverage the revolving door between the two sectors for personal gain?
