Government steadily increasing spending on consultants

Spending on consultants by Government departments has continued rising in Labour's five years in power, despite its desire to curtail the practice.

The cost of consultants in the 1999-2000 financial year was $111.9 million, but official figures released to Parliament's finance and expenditure committee show the annual cost had risen to $137.7 million in 2004-05.

Spending rose in the 2003-04 year by 15.1 per cent, compared with the previous year, and in 2004-05 it rose a further 8.9 per cent.

In 1995-96, consultant spending was $95.3 million, rising to $101.3 million and $109.7 million in the succeeding two years before hitting a big hump in 1998-99 when $177.7 million was spent, thanks mainly to an extra $40 million by the Treasury.

In 1999-2000 - the first financial year of Labour's first term - spending fell back to $111.9 million and then reduced in the next two years to just under $100 million, before climbing again to hit $137.7 million in 2004-05.

National finance spokesman John Key said the figures showed that Labour's claim it was hiring more public servants so it did not need to hire more consultants was a "complete hoax".

State Services Minister Trevor Mallard said in 2000 the new Government believed there had been an overuse of consultants in the public sector and it wanted the spending decreased.

A spokeswoman for Mr Mallard yesterday referred the Herald to Finance Minister Michael Cullen, who gave the committee the figures.

Dr Cullen's spokeswoman said the figures came with a full explanation, showing the increase had been at a slower rate than it had been under National.

The big-spending departments in 2004-05 were the Fisheries Ministry ($27.4 million), Environment Ministry ($13 million), Inland Revenue ($11.8 million), Economic Development Ministry ($11.7 million) and Education Ministry ($8.5 million).

Notes to the figures say the largest amount paid to consultants at the Fisheries Ministry is for fisheries research contracts, which were made fully contestable in 1997. The ministry also contracts a company to deliver fisheries registry services.

In a letter to the committee, Dr Cullen said the general trends showed spending on consulting services rose 4.2 per cent a year on average over the decade, peaking in 1998-99.

Between 1995-96 and 1997-98, consulting spending rose 7.3 per cent a year, some of which was likely to have been due to higher prices rather than a greater volume of services.

He said that between 1999-2000 and 2004-05 spending rose at a "more moderate rate" of 4.2 per cent a year.

Dr Cullen noted there were some limitations when comparing information between departments or between years.

These included departments' differing definitions of "consultancy" work, the fact that some consultant spending is driven by one-off projects and department restructuring.

The number of core public servants rose from 30,702 in May 1999 to 38,270 as at last September.

Spending on consultants by Government:

* 1995-96: $95.3m
* 1996-97: $101.3m
* 1997-98: $109.7m
* 1998-99: $177.7m
* 1999-00: $111.9m
* 2000-01: $98.5m
* 2001-02: $99.3m
* 2002-03: $109.8m
* 2003-04: $126.5m
* 2004-05: $137.7m