Analysis by Dr Bryce Edwards.
Political Roundup: The Big “consultocrats” debate needs to carry on
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.”
Further reading on consultants, contractors and the public service
Tom Hunt (Stuff): Former consultants reveal ‘ridiculous’ $500-an-hour charges to Government
Craig McCulloch (RNZ): Do public service consultancy criticisms stack up?
Colin Peacock (RNZ): Mediawatch: Kids and consultants – Media run the rule over opposition policy
Martyn Bradbury (Daily Blog): Rob Campbell vs Steve Maharey vs Ruth Dyson vs Simon Power vs the NZ Self Serving Public Service
Other items of interest and importance today
Roy Morgan: New Zealand: Labour/Greens level with National/Act NZ on 45.5% each after Chris Hipkins becomes Prime Minister
Janet Wilson (Stuff): Chris Hipkins, welcome to good intentions versus hard reality
Luke Malpass (Stuff): National snaps politics right back to December
Claire Trevett (Herald): Christopher Luxon’s trouble in combating Mr Likeable – PM Chris Hipkins (paywalled)
Herald: Editorial – Problems mounting for Government (paywalled)
Heather du Plessis-Allan (Herald): How do we choose if both major parties are much of a muchness? (paywalled)
John Roughan (Herald): Is the Govt’s about-face post-cyclone or pre-election? (paywalled)
Martyn Bradbury (Daily Blog): Tamati Coffey Waiariki step down cements Māori Party win and Helen White finally gets Mt Albert despite Jacinda
David Farrar: A Mt Albert upset
Thomas Coughlan (Herald): On the Tiles: Ayesha Verrall on lightning strikes, health targets and mātauranga Māori in science
Stuff: Points of Order: Grant Robertson fires back, Parliament’s new leak controls
Herald: Beehive Diaries: Green MP Chloe Swarbrick is spoiling for a fight – but who will take her on? (paywalled)
Herald: Chris v Chris: Poll, battle, mistakes – did Luxon or Hipkins deliver the goods to win the week? (paywalled)
Peter Wilson (RNZ): Week in Politics: National puts on a family-friendly face
Herald: Prime Minister Chris Hipkins tells Newstalk ZB he doesn’t see kids ‘anywhere near enough’ in top job
RNZ: Mt Albert candidate Helen White recognises impact of high cost of living
Erin Johnson (Stuff): Labour selects Helen White to replace Jacinda Ardern in Mt Albert seat
Adam Pearse (Herald): Tāmati Coffey to retire from politics: Outgoing Labour MP predicts future of Waiariki electorate
Newstalk ZB: Outgoing Labour MP on his parliamentary career, co-governance
Tina Law (Press): Labour stalwart wins selection to contest Christchurch East
Katie Townshend (Nelson Mail): Meet Blair Cameron: the National newcomer who wants to be Nelson’s MP
Victor Billot (Newsroom): An ode for .. the Baron Luxon
Kate MacNamara (Herald): The conflict and the Covid contract: The $16.5m health contract and the spousal relationship that raised red flags (paywalled)
Nikki Macdonald (Stuff): Under the influence? Inside New Zealand’s first disclosure of drug company payments to health professionals
Newshub: Immigration Minister Michael Wood acknowledges result of $514k health worker recruitment campaign ‘not high enough’, but it will build
Sarah Dalton (Stuff): Public sector pay restraint is strangling our health system
Mike Hosking (Newstalk): Health issues are going to sink this government
RNZ: Hospital ED data: Former Waitematā DHB head to investigate publishing error
Newshub: Prime Minister Chris Hipkins calls Te Whatu Ora emergency department data error ‘unacceptable’
1News: Te Whatu Ora blunders see PM call for more vigilance
RNZ: Ambulance ramping getting more common with ED pressure
Adam Pearse (Herald): Health Minister Ayesha Verrall reveals inappropriate use of public funding in Te Whatu Ora advert
RNZ: Health Minister orders advert featuring her to be taken down
Jenna Lynch (Newshub): Revealed: Health Minister Dr Ayesha Verrall’s ‘inappropriate’ puff profile in $14k publication
Jamie Morton (Herald): Govt changes tack on long-awaited Covid-19 prevalence survey
Ripu Bhatia (Stuff): Disabled were 13 times as likely to die from Covid-19 – report
Sophie Harris (Stuff): Covid-19: More than one in five young people felt unsafe in their bubble
Michael Neilson and Azaria Howell (Herald): Big Gay Out: PM Chris Hipkins speaks after first visit to Auckland event, Govt commits to ending HIV
Rayssa Almeida (RNZ): Health complaints process ‘slow and ardous’ – complainant
Nathan Morton (Herald): Thousands of meningococcal B vaccines among 36,000 affected by store fault, thousands delayed, ‘human error’ blamed
Kiah Radcliffe (Stuff): Regional GPs warn shortage will worsen as ageing population retires
George Heagney (Stuff): Funded and unfunded cancer drugs – ‘one contains solvent and the other egg protein’
Tatiana Gibbs (Stuff): ‘When’s our turn?’ Pharmac’s new funding won’t cover breast cancer fighter’s $100k bill
Ben Wheeler, Martin de Bock and Jim Mann (Newsroom): We can’t let the ball drop on diabetes
EXTREME WEATHER, INFRASTRUCTURE, CLIMATE CHANGE
Michael Neilson (Herald): Cyclone Gabrielle: PM Chris Hipkins says ‘no question’ over bigger Budget spend, warns costs in billions and felt over long term
Max Rashbrooke (Stuff): Reviving a modern Ministry of Works necessary to cope with modern infrastructure demands
Dileepa Fonseka (BusinessDesk): ‘Not On My Balance Sheet’ opens the door to PPPs (paywalled)
Simon Wilson (Herald): Why flood-prone New Zealand needs to be more like Merwedekanaal (paywalled)
Stephen Ward (Waikato Times): Metre-plus flood threat to hundreds of Hamilton homes
Bernard Orsman (Herald): Auckland storms raise concerns about housing development alongside flood plain in Grey Lynn
Vivienne Elizabeth (Newsroom): Life in the red-stickered zone needn’t be quite this hard
Bridie Witton (Stuff): Cyclone Gabrielle: Food, bedding and clothing grant hasn’t increased in nearly 20 years
Adam Pearse (Herald): Cyclone Gabrielle: Lack of evidence roadworkers were threatened with guns led to PM doubting claim
Tom Dillane (Herald): Auckland floods: Fire chief’s ‘communication fails’ to mayor Wayne Brown angers staff (paywalled)
Rod Oram (Newsroom): Farmers’ self-interest should encourage climate mitigation, if nothing else
Katy Jones (Stuff): Housing plans make it impossible to meet carbon targets, groups say
Denise Piper (Stuff): Mayor doubts climate change intensified Cyclone Gabrielle, asks for proof
Michael Fraser (Herald): Cyclone Gabrielle sends a message about accountability (paywalled)
Rob Stock (Stuff): Forestry workers told not to wear branded uniforms as tensions over slash run high
Rachael Kelly (Southland times): Environment Southland says forestry slash risks are being managed
Andrea Vance (Stuff): For the sake of the planet, hold fire on rushed planning laws
Andrea Vance (Stuff): Oceans apart: How New Zealand’s global promises don’t match up on our own shores
Andrea Vance (Stuff): How our love affair with plastic is fouling a national park
Olivia Wannan (Stuff): Electricity is the cleanest it’s been since records began
Liam Dann (Herald): Without appetite for real change, banking inquiry is just political theatre (paywalled)
Jenée Tibshraeny (Herald): How politicians’ finger-pointing at banks could put the spotlight back on them (paywalled)
Jenny Ruth (BusinessDesk): Reserve Bank needs to check its facts (paywalled)
1News: Q+A: Expert warns windfall tax on banks comes with risks
Rob Stock (Stuff): Here’s why one former banker thinks the rip-off is not mortgage rates, but deposit rates
Anna Whyte and Luke Malpass (Stuff): Inside the big pay bump teachers are rejecting as they prepare to strike
RNZ: PM hopes schools and pre-schools strike can be averted
Herald Editorial: Teachers dispute another tricky problem to navigate (paywalled)
Heather du Plessis-Allan (Newstalk ZB): Raise pay for teachers
Katie Doyle (Stuff): Researchers call for Te Ao Haka to be given equal status in NCEA
Aaron Hendry (Newsroom): Truancy is more than a political soundbite
Denise Piper (Stuff): Student-fronted campaign hailed for boosting school attendance rate
Damien Grant (Stuff): What does a childcare policy tell us about the Leader of the Opposition?
Aisling Gallagher (The Conversation): New Zealand’s childcare is among the most expensive in the world. But tax rebates are not the answer
Shane Te Pou (Herald): Time to make early childhood education a public service
Todd Niall (Stuff): Leo Molloy sought new media friends for the mayor Wayne Brown
Matthew Scott (Newsroom): Swarbrick comes out swinging at Auckland Council budget cuts
Simon Wilson (Herald): Auckland Council meeting abandoned while debating flood damage (paywalled)
Erin Johnson (Stuff): Meeting ends early due to lack of councillors
Erin Gourley (Stuff): Explainer: Why Wellington’s rates bill is increasing
Erin Gourley (Stuff): Council approval the next hurdle for planned Fale Malae on Wellington waterfront
Nicholas Boyack (Stuff): How did Hutt City end up in such a financial pickle?
David Hill (Local Democracy Reporting): No easy answer for Māori representation on Kaikōura council
Michael Fallow (Southland Times): ICC holding company unrattled by big drop in Invercargill Central share value
Zizi Spark (Rotorua Daily Post): Rotorua mayor Tania Tapsell announces pregnancy, to be first known person in NZ to give birth as mayor
Rachel Moore (Waikato Times): The mayor who lives in a caravan to be closer to council HQ
Stephen Ward (Waikato Times): Developer wins multi-million dollar development contributions case against city council
Nicholas Boyack (Stuff): New Wellington Water boss says reform must happen
Vince Cocurullo (Herald): What do the Three Waters reform proposals mean?
Anna Rawhiti-Connell (Spinoff): No, the government has not rolled out Three Waters branded cars
Richard Harman (Politik): Human Rights Commission hires He Puapua author
1News: Q+A: Nothing undemocratic about co-governance – Hipkins
Sam Olley (RNZ): Police step in as co-governance supporters clash with meeting organiser
Thomas Manch (Stuff): Privacy Commissioner warns against Govt’s latest expansion of police search powers
RNZ: Law change to allow police to photograph youth not likely ‘at the moment’ – Hipkins
Michael Neilson (Herald): Reports of retail crime up nearly 40 per cent last year, almost 300 incidents every day
William Hewett (Newshub): National Party leader Christopher Luxon slams ‘soft on crime’ Government as new figures reveal 39pct increase in retail crime
1News: Q+A: Extending fuel tax cut won’t raise emissions – Hipkins
Andrea Fox (Herald): Cook Strait ferry failures: Who runs the ferries and how much do they cost? (paywalled)
Georgina Campbell (Herald): Dire Strait: ‘Completely inadequate’ – Letter to Government over Cook Strait safety fears (paywalled)
Conor Knell (Stuff): ‘Room for about 30 cars’: Interislander passenger stunned by empty ferry deck after Kaitaki sailing cancelled
Tom Powell (Stuff): Electric rail should be the future of domestic transport
RNZ: Tīmaru’s on-demand transport service gets more Waka Kotahi funding
ECONOMY, COST OF LIVING
Steven Joyce (Herald): Winter is coming — ready or not (paywalled)
Liam Dann (Herald): GDP Preview: Payback time – economy likely shrank at end of 2022 (payalled)
Martyn Bradbury (Waatea News): Tax the rich to pay for the poor
Rob Stock (Stuff): $600 buy now, pay later threshold ‘would lead to absolute disaster’
Rob Stock (Stuff): Insurance industry not putting proper value on ‘women’s work’
Rob Stock (Stuff): Genesis Energy forgives debts of women abused by partners
Bruce Munro (ODT): Global Insight: Role for NZ in US-China power games
David Farrar (Kiwiblog): Trade coercion
Matt Nippert (Herald): ‘If you send me back I will die’: Dramatic escape for first defector to NZ since Cold War (paywalled)
Bernard Orsman (Herald): What King Charles talked about with NZ High Commissioner Phil Goff at Buckingham Palace
Sasha Borissenko (Herald): Gavel comes down on archaic ways as long-awaited Law Society report out (paywalled)
Hamish McNicol and Calida Stuart-Menteath (NBR): Anyone want to buy a law firm? (paywalled)
CULTURE WARS AND FREE SPEECH
Karl du Fresne: On free speech and where not to find it
Philip Matthews (Stuff): Poetic anger or racism in reverse? The controversy over a Captain Cook poem
Herald Editorial: Language a moving feast, but the N-word’s a no, Nobby (paywalled)
Karl du Fresne: Meng Foon should pull his head in
Martyn Bradbury (Daily Blog): The woke just cancelled Richie Hardcore!
RNZ: Women’s rights group apologises for choosing Richie Hardcore to speak
Martyn Bradbury (Daily Blog): Dawkins vs mātauranga Māori vs Western Science vs woke culture wars