OPINION

There is quite a bit of attention being paid to the costs of consultants and contractors in the public sector. Both major parties have targeted spending in this area and there has been some significant attention to Te Whatu Ora in particular for having a very significant number of consultants and contractors which is now being managed down.

I have been critical of such arrangements in the health sector, but I find myself a bit out of tune with the present discussion. In my view the real issue here is not so much about costs.

That is not to say that excessive or wasteful spending in the public sector is not important. Those of us who take the view that strong, efficient and equitable public services are essential to a healthy society should be active in stopping such waste.

There are two reasons for this: there is always pressure on public sector spending and we need to ensure it is done right; but if it is not done right it undermines the whole idea of public services. We can see how this plays out right now as parties with no real interest in such services use waste and excess as excuses to cut them.

So I think we must be rigorous in ensuring that consultants and contractors are not generally raising costs unnecessarily. We know that this does happen. In health there were many examples of contractors in e.g, IT roles, who were there at rates well above employee rates as a means of getting around public sector pay restraints.

Equally it was galling to see executives recruited by consultancy companies at rates higher than Te Whatu Ora was able to pay only to see those same people being marketed back with added margin.

In some ways, if the costs are not different it does not matter much if someone works as a contractor or as an employee (other than to the PSA which misses a fee on contractors).

But it is a practice which can add additional overheads in contract management outside of standard employee management costs. It also often allows less stringent control simply because of the more decentralised nature of the contracting involved.

It also can also undermine standardised working conditions in collective employment contracts to the detriment of employee security.

So overall any widespread replacement of employees with contractors does weaken the public service and it has been surprising not to see stronger union and Public Service Commission resistance to it.

Career paths and continuity of service get sacrificed for a “flexibility” which is often enough an illusion.

These individual contract issues are quite different to those regarding the consultancies which play such a big role in public sector management. It is not helpful to consider them in the same light.

It is quite reasonable for external specialist services to be engaged by any organisation where skills are not required on a fulltime and committed basis. Though often such skills could be employed directly on part-time in these days of more flexible working arrangements.

Or they could be structured within the public sector if that operated on a less siloed basis than is currently the case. The PSC is lax in seeking better ways to structure such services and should be told to be more proactive than it has been.

The biggest dangers I see in consultancy roles today are where:

* They weaken rather than help build skills and capability within the public service; or

* They drive policy and operational matters which meet their business goals rather than public service goals; or

* They escalate costs by cartel behaviour even if it is informal; or

* They reinforce elitism and hierarchy.

Anyone active in public sector governance or management with any reflective capability will be familiar with such examples and Te Whatu Ora was certainly not immune to them.

Unfortunately, some management roles are bound up in continuation of such activity and some board directors have become so used to “consultant assurance” that they see it as a personal risk management device.

So overuse of external consultants is a risk to a strong, efficient and equitable public service and should be carefully overseen. Not just for cost reduction.

Rob Campbell is a professional director and investor. He is chancellor at AUT, chairman of Ara Ake, chairman of NZ Rural Land, an adviser for Dave Letele’s BBM charity. He is also the former chairman of Te Whatu Ora (Health NZ)