5 Nov 2018

Continued contractor public spending 'value for money'

12:45 pm on 5 November 2018

A recruitment industry figure says government departments still spending massive sums on contractors despite orders to cut it back are getting value for money.

Minister for Education and Leader of the House Chris Hipkins.

State Services Minister Chris Hipkins has championed less spending on outside contractors. Photo: VNP / Daniela Maoate-Cox

The Ministry of Business, Innovation and Employment (MBIE) spent $95 million for the second year in a row.

But while MBIE said it was trying to cut back, Inland Revenue was increasing its use of contract labour.

That contradicted the position of State Services Minister Chris Hipkins, who said he wanted "steady downward pressure" on contractor and consultant spending.

In addition, IRD's use of fixed-term contracts had gone up fivefold.

Adam Shapley, managing director of the recruitment firm Hays, warned it was futile to resist inevitable changes in how people worked.

He told Morning Report that the changes to work practice reflected a need for employment flexibility and an increasing demand for technological skills, which were in demand in the public and private sector.

Mr Shapley claimed many people with these skills wanted to work on a contract basis.

"If you are looking at the way organisations, including government, are using increasing numbers of contractors I would say that it has been right across the Western economies, Australia and Europe, and that is because of increasing demand for technological skills.

"If you look at what the governments are doing, they are having to change technical infrastructure.

"They have building programmes, they've got infrastructure programmes, and those skills are in demand, so they are competing for those talents."

He said the minister should look at contract spending by organisations on a case-by-case basis and take into consideration issues of supply and demand with skills needs for specific tasks needed by organisations.

Contractors didn't need institutional knowledge of organisations government departments to implement specific tasks and that they offered value when existing civil servants lacked skills to do so.

State Services Minister Chris Hipkins railed against contractor spending while in opposition, and in June promised to cut it back, after it doubled in a decade across 30-plus departments to $500 million.

Mr Hipkins now said he expected to see the results of "a steady downward pressure on contractors and consultants" from next year.