Ministry in spotlight over high-earning contractors

A huge leak of financial data from the Ministry of Business, Innovation and Employment has revealed a large rise in the number of high-earning taxpayer-funded contractors.

A whistleblower within the Ministry and with access to internal financial information has released a spreadsheet containing details of more than $250 million in payments made for more than 2000 individual contractors, and $54m in payments to consulting firms, made over the past four years.

One contractor is shown to have charged $3000 a day, while another had taxpayers fork out $400 per hour for their services.

A MBIE spokeperson said the daily charge also included GST, while the hourly rate was not considered contractor spending as it was for the provision of legal advice.

Analysis of the data shows the number of highly-paid contractors at the Ministry - those earning $200,000 or more pear year - exploded over the past four years, increasing from 23 to 94.

In a written response to questions, MBIE chief financial officer Stewart McRobie rejected any suggestion of waste and said its contracting was "subject to a contestable tender process and competitive rates, terms and conditions".

McRobie said most of the high-earning contractors identified by the Weekend Herald were "employed to provide specialist support, mainly for IT projects which are ultimately aimed at improving services to the public".

Individual contractors would not receive the full amount billed as take-home pay, as recruitment firms arranging their placement collect a percentage of the total - typically 8-12 per cent, according to industry insiders.

Both Minister for Economic Development David Parker and State Services Commissioner Peter Hughes are seeking answers from the Ministry following Weekend Herald questions about high-earning contractors and whether they were being properly disclosed.

Parker, in Argentina for a World Trade Organisation, said he was "concerned" by the revelations and had requested the Ministry's officials meet with him once he returned to the country next week to provide an explanation.

Hughes restated it was important government departments were transparent and "prudent with the spending of taxpayers' money," and said he too was seeking a briefing from MBIE's chief executive.

Following these "please explain" requests, MBIE chief executive Carolyn Tremain issued a statement claiming work had already begun on reducing the contractor bill.

"In October I initiated further work to achieve a significant reduction in MBIE contractor and consultancy spending where appropriate – and already contractor numbers are down by 105," she said.

This belated cull represents only a 4 per cent decline in MBIE's contractor numbers, although no figures were provided as to what they were costing.

Opposition MP and Act Party leader David Seymour said he believed the growth in contractor spending showed "incompetence on the part of the Government managing it" and said it would likely be reflected in other government departments.

The leak also raised concerns the increasing reliance on contractors made a mockery of the requirements for government departments to disclose high-earning staff.

According to the Ministry's annual report, 52 staff were paid $200,000 or more in the year to June 2017. But had contractors been included - and the leak shows many worked full-time for multi-year stretches at the Ministry - this figure would almost triple.

Public Service Association national secretary Glenn Barclay said the increasing reliance on expensive contractors "undermines the career public servant" and was likely spurred by the previous government's public service staff cap.

Barclay was alarmed to hear the numbers of highly-paid contractors at MBIE. "If that's the case we'd be concerned about that, very concerned. There needs to be transparency."

McRobie said they stood by their reporting and the leaked information was of "raw working data" that had some discrepancies but was all properly accounted for.

He added the release of the information was a "serious matter" and an investigation had begun to identify the leaker.

By contrast, both Barclay and Seymour expressed broad support for whistleblowing.

"It's a signature of a free society where people who try to take power, seize power, or waste taxpayer money will find themselves undermined from unexpected quarters," Seymour said.

The Weekend Herald has released the leaked data, with personally identifying details removed, on our Herald Insights webpage.

CLARIFICATION: An earlier version of this story said contractors were charging up to $12,000 a day and $1100 an hour. These numbers were provided to MBIE prior to publication, but afterwards the Ministry said these figures were recorded incorrectly in internal records leaked to the Herald, with the former having a misplaced decimal point and the latter fee being daily.