Department of Conservation, Crown Law among agencies spending more on consultants

Four public sector agencies have reported increased spending on contractors and consultants in a year, following a directive from the Government for departments to cut back.

Alongside roles deemed “back-office”, contractors and consultants were placed in the public sector firing line as mass cuts took shape, with a new era of fiscal restraint urged by Public Service Minister Nicola Willis.

Data released by the Public Service Commission shows overall public sector spending on consultants decreased to $940 million in the year to July. The prior financial year, the total operating and capital expenditure on contractors and consultants across the public service was $1.27 billion.

The data confirms both the Department of Conservation (DoC) and Land Information NZ (Linz) have spent millions more on consultants in the 2023/24 financial year than the previous financial year.

Crown Law and Independent Children’s Monitor Aroturuki Tamariki also increased spending on contractors and consultants, comparing the two financial years; the latter was only set up in May 2023, meaning its finances from the prior financial year were only counted for two months.

In a statement to NZME, Department of Conservation chief financial officer Kevin Martin said the agency used consultants, contractors, and other professionals when it needed “specialised expertise for high-priority conservation projects”.

“We make every effort to get value for money without compromising on important conservation outcomes.

“The kind of expertise we usually outsource includes engineering, biodiversity research and advice, and technical expertise and it’s usually more cost effective to pay for this when required for projects, rather than have permanent people in-house.”

The $12.9m spending increase in contractors and consultants between the two financial years was said to be mostly due to “increases related to Government priorities”, Martin said, citing the Milford Opportunities Project and drinking water infrastructure.

The spending increase was also blamed on projects to improve the conservation authority’s internal systems, processes, and infrastructure, such as internet connectivity and assessing and fixing properties.

“DoC is forecasting a reduction of about $7 million in spending on contractors and consultants for the 2024/25 year. We’re managing our finances tightly, focusing on priority and essential projects, and will continue to extract value for money from consultants and contractors while getting the best outcome for conservation.”

Linz posted a $6.6m increase in capital expenditure on contractors and consultants and a $2.2m decrease in operating expenditure, giving it an overall $4.4m increase in spending on contractors and consultants when comparing the financial years.

Acting kaihautū for organisational effectiveness, Jonny McKenzie, said the agency generally used contractors when there were technical gaps, to backfill positions, or for time-limited programmes where permanent staff would be “less cost effective in the long term”.

McKenzie said its increase in capital expenditure was fully attributable to the agency’s project to modernise Landonline, a system used to assess land and property information.

Linz estimated the upgrade of the survey and title enhancement programme, Step, to be completed in 2026 with a $175m cost to be repaid over 10 years of user fees.

“As Step nears its first milestone completion date in mid-2025, resources have increased as planned and in line with the budget delivery expectations. Step will begin transitioning from being a mainly development-focused workforce to a reduced maintenance workforce from 2025 onwards, which will lead to a significant reduction in Linz’s contractor and consultant spend.”

McKenzie said the agency was on track to achieve annual cost savings of 6.5%, and since October 2023 had reduced its use of contractors and consultants.

“Linz continues to take a disciplined approach to our financial management, carefully prioritising our spending to ensure we provide high-quality core services and deliver maximum value for money for taxpayers,” he promised.

Independent Children’s Monitor Aroturuki Tamariki became a departmental agency on May 1, 2023. Before that, its data was included as part of the Ministry of Social Development’s spend.

Its $300,000 expenditure in the 2022/23 financial year covered a two-month period, whereas its 2023/24 expenditure, at $500,000, covered the entire financial year.

“Contractor and consultant expenditure has decreased since we became a departmental agency. This is because contractor and consultant staff assisting with the transition to a departmental agency completed their work, and because we were able to recruit permanent staff into our confirmed organisation structure,” chief executive Arran Jones told NZME.

“Continued contractor and consultant spend includes the provision of some back-office services where, owing to the limited demand, it is more cost-effective to enter into on-demand contracts, rather than employing staff.”

Crown Law has confirmed a “minor increase” of $11,008 in contractor and consultant expenditure between the two financial years. The department’s increase in capital expenditure was put down to an upgrade of its document management system.

“In line with the Government’s focus on reducing contractor and consultant spending, Crown Law is forecasting a reduction of approximately $300,000 in the 2024/25 financial year compared to 2023/24,” Crown Law said in a statement.

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.