| A parasitic blight on our democracy? Or a useful and necessary aid to our government departments? Those are two perspectives on the usefulness of the Wellington consultant class that contract to government agencies.
The role of business management consultants took centre stage last week when National’s Christopher Luxon called time on the over-use of “consultocrats” in his state of the nation speech. Luxon pledged to cut the use of contractors by 25 per cent off the $1.7bn that was spent last year by government departments and agencies such as Te Whatu Ora and Waka Kotahi.
Jackpot for National, disaster for Labour
The debate has proved to be a winner for National, as they have been able to dominate the last week in politics on an issue that very much has Labour on the backfoot. At the end of the week, the Herald’s Audrey Young pronounced that National “has finally hit the jackpot” on the issue.
She explained how bad it was for Labour and the Prime Minister: “it was the first time it had had Prime Minister Chris Hipkins squirming. No matter how much he said he wasn’t going to defend the rising costs of consultants, he had to explain why much of the expenditure was justified which, of course, was pretty much defending the rising costs of consultants. He was squarely in the frame as well because the ministry with the largest expenditure was Education when he was the minister.”
Hipkins appears to be snookered on the issue. Writing in the weekend, Janet Wilson says Hipkins “had two odious choices; either defend the use of consultants or accept National’s criticism. In the end, he did both”. One problem for Hipkins is that there are plenty of examples that National can bring up from the past in which he was very much in line with National’s campaign against the overuse of business consultants.
For example, RNZ’s Craig McCulloch published this 2012 statement from Hipkins about governments hiring consultants, suggesting it could just as easy have come from Luxon this week: “It’s a really bad look for them. I think they should be asking some very serious questions about why this increase in consultant fees has been necessary at a time when all New Zealanders are being asked to tighten their belts.”
McCulloch points out that Hipkins and Labour are highly vulnerable on the business consultant issue. This is especially because Hipkins looks rather hypocritical having campaigned against “consultocrats” and then becoming the Minister in charge of both the State Services in general, and the very ministry that has been the leading spender on contractors.
In opposition, Hipkins claimed that National’s use of contractors had increased eight-fold in the Ministry of Education, saying in 2016 that they were spending “a whopping $100,000 a day on consultants and contractors” in this area.
This raises the issue of whether all parties in opposition just use the consulting debate to score political points, but then get into power and become just as reliant on the consultants and contractors. Newsroom’s Sam Sachdeva pointed out on Friday that “spending on consultants and contractors almost doubled during the National government’s nine years in power, rising from $278 million in 2009 to $550m in 2017 according to figures compiled by Labour after it took office.”
Therefore, Sachdeva says that “Promises by opposition MPs to clamp down on such spending – and a subsequent failure to make that a reality in government – are far from unusual.”
When the political right favour consultants and the left oppose
Not all politicians are campaigning against the state’s use of the private sector. The Act Party is sticking up for business consultants, with leader David Seymour coming to their defence last week, telling the National Business Review, “I think we need to be a bit cautious of opposing the very idea of contracting the private sector to help develop public services”. He also was against the consultants themselves being targeted in the debate: “It is very unfair to blame them for taking work the Government is offering. They would be negligent if they did not”.
Many on the political left have given National’s campaign against the consulting class some sort of approval. Writing in the weekend, leftwing columnist Max Rashbrooke said that the Luxon-initiated debate has “has revealed how hopelessly, cravenly reliant modern government is on the Deloittes and Chapman Tripps of this world. The state has been hollowed out in recent decades, losing expertise, wisdom and savvy.”
Similarly, leftwing pundit Martyn Bradbury has come out colourfully against the use of the private sector in government agencies: “Labour’s reliance on consultants is part of their cultural Professional Managerial Class capture. The Wellington Bureaucracy isn’t left wing! It’s a self interested Professional Managerial Class who use identity politics to mask their neoliberal hands-off-do-nothing-but-build-glass-palaces fiefdoms.”
Chris Trotter also wrote on Friday for the Otago Daily Times on how business consultants have played a key role in keeping governments wedded to neoliberalism orthodoxy. Certainly, there is a strong argument that the use of business consultants has hollowed out the power of the state, and led to government departments that are incapable of playing a full role in governing society properly.
Relating to this, Massey University public management researcher Andrew Cardow has argued this week that government and business interests are getting too close under the contracting arrangement. Newsroom reported his view: “Cardow said claims that private firms brought a more objective eye to policy issues did not stand up to scrutiny, given much of their revenue came from securing state contracts, while an overreliance on the private sector resulted in a weak government.”
Some on the political left are therefore arguing that the response to the dominance of the consultocrats in government should focus on building up public service capacity instead of eroding it by the use of consultants.
Revelations about the extent of business consultants and contractors in government
Previously it’s been reported that in the last year the Labour Government has spent $1.2bn on consultants and contractors. This figure only includes the money spent by core public service departments. Once other government agencies such as Waka Kotahi and Te Whatu Ora are included in this spending, National has calculated that this figure is about $1.7bn.
Audrey Young has looked at the Public Service Commission figures, and created a “league table” of the biggest spenders for the last year: “Education spend $237 million on consultants and contracting in the 2021 – 22 year, Health spent $154 million and the Minister of Social Development spent $116 million”.
National has now drawn attention to the central role of the “Big Four” business consultancies of Deloitte, KPMG, Ernst and Young (EY) and PricewaterhouseCoopers (PwC) in the spend-up. The calculations are that in the year that Labour took office, the Big Four were receiving contracts amounting to $57m, but that this figure had surged to $97m for 2022.
Deloitte was the biggest beneficiary according to National, earning $115.8m since Labour came into power. The next biggest beneficiaries since 2017 have been PwC ($93.6m), EY ($69.9m) and KPMG ($37.6m). In total, the Big Four have been paid $316.8m since Labour came to power.
The role of the consultocrats in the health system
The Big Four have been particularly busy in the health sector. BusinessDesk has discovered that during the pandemic, 40 per cent of the Ministry of Health’s Covid spend on consultants went to the Big Four. According to BusinessDesk’s Cécile Meier, “The Ministry of Health has spent nearly $200 million on consultants in the two years to July 2022, almost twice as much as it did in the four years prior.”
The use of consultants in health has become extremely unpopular amongst many health specialists and commentators. For example, BusinessDesk has reported the view of healthcare investor Michael Haskell that the use of consultants has become a “major problem”.
Here’s Haskell’s assessment of the situation: “Bureaucrats and external consultants tend to protect one another in a taxpayer-funded rort that goes a bit like this: the bureaucrat hires a high-priced team of consultants from PwC/Deloitte/KPMG/EY and pays them hundreds of thousands of taxpayer dollars and then the external consultant produces a report stating that the healthcare sector needs more funding for more bureaucrats, and then the cycle repeats itself.”
Haskell concludes: “Until this cycle stops, it will be very difficult to improve our healthcare sector to any material degree.”
He’s not the only one complaining. Health commentator Ian Powell has also been quoted saying “Relying on business consultants for health decisions is rather like asking Wayne Brown for advice on etiquette.”
But it’s outgoing Te Whatu Ora chair Rob Campbell’s analysis that needs the most attention. Prior to being fired last week, he announced that he was about to carry out a crackdown on the consultocrats in health, explaining “There has been a hollowing out of expertise in a number of areas in the health system in favour of consultancy companies”.
Campbell gave his own troubling assessment of the health consultocracy: “The more you hire consultants, the more the workforce gets weakened. Indeed, we have got people who are very good at their job being poached by consultancy companies so they can sell their services back to us… If we can’t cut the overall spend on external consultants, we won’t succeed in our aims. It’s as simple as that.” |
Consultancy has always been a key element of monetarism and neo liberalism.
It is about enabling the penetration of public infrastructure and institutions by private capital. It is about ancient framing that says capital is better than public ownership and control–despite immense evidence to the contrary–Cyclone Gabrielle being the latest extreme example.
Baldrick’s anti consultant line is bollocks, in office the Natzos would link it to a general slash/sinking lid on social expenditure.
on a sidebar many of them come from the big accounting companies, companies guilty of providing fraudulant accounts and credit ratings (for large fees) to institutions that caused the GFC why are we employing people from criminal organisations?
Really? Because they are so much better at their jobs than our bunch are.
I would cite the GFC and the current state of NZ as refutations of your comment warbler
Pot calling the kettle black by the Natz as usual.
Beat this…’https://www.nzherald.co.nz/nz/banker-who-earns-23m-from-hnz-wins-most-lucrative-contracts/7NIG2E6M2EXWJNAAK2LWBUYOOE/
Here’s where some of that extraordinary waste of money in education consultants went:
https://whyevolutionistrue.com/2022/09/05/another-bizarre-attempt-to-show-that-traditional-ways-of-knowing-in-new-zealand-are-even-better-than-modern-science/
Karl Wixon
Kaitohu Matua Māori / Chief Advisor – Māori (p/t contract)Kaitohu Matua Māori / Chief Advisor – Māori (p/t contract)
The role of the Chief Advisor Māori is to identify, lead, drive, align and embed Rautaki [Strategic] Māori throughout Education NZ Manapou ki te Ao. [“Education New Zealand”]
This guys is so deluded and ideological he thinks that Maori could see galactic structures invisible to the naked eye long before Nasa put up telescopes, hence mātauranga Māori should trump real science in the education system.
I guess this is why the Ministry of Education is now pushing discredited religious concepts like Mauri (‘life force’) into the school Chemistry curriculum.
And we wonder why we had a bunch of science deniers rioting on the front lawn of Parliament. This guy should refund all his consulting fees – this is grifting, pure and simple.
It’s not so much having consultants, it’s the amount of them, the lack of diversity in their thinking and the lack of expertise many of them sport.
Having copious amounts of ‘big 4’ consultants who are earning $200k while being billed out at $960,000 per year to government and then only working a few hours a day, multiplied by enormous amount of this happening is part of the problem!
Former consultants reveal ‘ridiculous’ $500-an-hour charges to Government
https://www.stuff.co.nz/dominion-post/news/wellington/131457477/former-consultants-reveal-ridiculous-500anhour-charges-to-government
Then the ignorant spouting on social media who seem to be cultural ‘advisors’ paid for by government coffers.
Another bizarre attempt to show that traditional “ways of knowing” in New Zealand are even better than modern science
https://whyevolutionistrue.com/2022/09/05/another-bizarre-attempt-to-show-that-traditional-ways-of-knowing-in-new-zealand-are-even-better-than-modern-science/
I hear poor Prince Andrew expense of Indian healer is not being paid. Poor diddums! So many consultants to the rich, famous, and stupid, it’s not just woke governments that seems be be jumping on consultant band wagon, it’s those that didn’t notice an 18yo being sex slaved out by New York elite turned financial/sexual criminal but needs a month of an Indian healer to help the wounds!
https://www.nzherald.co.nz/lifestyle/royal-biff-prince-andrew-complained-he-was-left-no-money-by-the-queen-when-she-died/WFHVK3CSR5DGXOB6AC53EHJIZY/
Millions of funding going to the same people, who deliver very little but certainly know how to spend money on lawyers to keep their gravy trains going!
Deep inside the explosive We Are Indigo saga
https://thespinoff.co.nz/business/01-11-2022/deep-inside-the-explosive-we-are-indigo-saga
Many of NZ woes could be rectified by a law that prohibited any more than a 100% mark up of a person’s services.
We have plumbers on $30 p/h who don’t know what they are doing being billed at $90 p/h+ (and expenses on top) which rewards employers paying the least they can for the least qualified as they can add more margin.
Likewise consultants earning $100 p/h being billed at $500 p/h by the big 4. Needs to be accurate transparency in these transactions.
Lawyers are also exploiting their workers and customers by gross overbilling and their is a lack of justice in NZ as gross profiteering and lack of accountability is prevalent in the law.
Disgraced lawyer Barry Hart loses bid to save career
https://www.nzherald.co.nz/nz/disgraced-lawyer-barry-hart-loses-bid-to-save-career/HIMMG763EECRX2OXACGSAV4774/
Senior defence lawyer’s actions referred to Law Society in Taranaki meth dealing case
https://www.nzherald.co.nz/nz/senior-defence-lawyers-actions-referred-to-law-society-in-taranaki-meth-dealing-case/SQO3H3F276MDWUYRM7J4CGNNKM/
NZ is dysfunctional because whenever you go to get a service now, you pay top dollar for an amateur who often can’t do the job and delays the entire process, racking up everyones costs – to the benefit of the exploiter who gets more profit by pushing in amateurs or untrained people to do the work!
Hospitals can’t get waiting lists down, because you need qualified doctors and nurses not all the other professions that are steadily taking over but can’t actually do the main work of a hospital of health care!
What’s to stop a group of dissatisfied commenters here from setting up as a consultancy? NZ is welcoming to new businesses, rates as one of easiest in world!! Would need to have someone with creds at the helm and then a bunch of eager beavers under – could be a goer if we were prepare to put our all in; or oar? Or may be then we would be stuck up the creek without a paddle.
But no worries; all you need in those circumstances is an amoral GPS and nice white teeth, plus a pleasing air of confidence (resorting to victimhood if necessary).
We live in a complex and technical world were there’s no chance that elected politicians can be across everything that comes across their table. So, the use of external specialists is inevitable.
However, the problem Labour ministers in particular face is that so few of them have professional or technical qualifications. Few that I can recall have held down professional careers prior to entering politics and a some I can think of have never actually had a real job! So, it’s hardly surprising that they’re so often out of their depth and rely of external people to hold their hands.
I notice there are now a few media whores who traditionally had there right leg slightly shorter than the left who are starting to question the economic orthodoxy and neoliberal faith over the past few years.
Many of them used to consider themselves centrists. Probably still do but they fail to consider the swing to the right over the past 3 or 4 decades as the neoliberal faith took hold and swept them into the religious cult that runs things these days.
That Janet Wilson ‘piece’ wasn’t that bad – something she’d probably never have written a few years back while selling herself as a PR/spin mistress to gNactoids.
She references one of Danyl McLauchlan’s earlier efforts. He is usually on to it – in this instance taking an interest in Picketty’s Brahmin Left and Merchant Right.
I’m still hoping it’s not too late for Labour to wake the fuck up. If they don’t, I reckon they’re going to be forced to do so.
It’s all quite cowardly really: the Labour neolibs and 3rd wayers never had the decency to start their own party – far easier to hijack an existing one
They’re never going to get rid of the consultants because the system is totally reliant on them to get essential work done. Here’s an example:
Years ago I worked for an architecture firm that was set up by a group of architects who had previously worked for the Hamilton Ministry of Education office. On a certain date in the late 80’s they ceased to be employees of the state and instead became business owners (of an architecture firm). The Ministry had 90 projects on the go at that time and these were all transferred to the new architecture firm – and the same people continued to work on them. If they hadn’t chosen to do this the Ministry would have been royally screwed – which is a sign of how poorly planned it was!
All that was left at the Ministry were the former accounting clerks who had now became the decision makers – even though they knew nothing about architecture or education.
I’m actually now wondering if architectural consultant fees could be hidden in construction budgets – and whether ministries everywhere use tricks like that to hide the true cost of consulting fees.
Don’t know the guy on the page, but his eyes in the image look haunted; hunted?
He wears the uniform @ grey; rides the waves; and he’s thoroughly gorjiss. Good enough to be on The Panel even. An influencer. Entrepreneurial. Mover and shaker.
Without me specs on, he doesn’t look that much different from that spiv Tim S
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