Te Whatu Ora paid four consultancy firms $82m in first 16 months

3:31 pm on 24 November 2023

Photo: 123RF

Te Whatu Ora / Health New Zealand claims to have cut more than $100 million off its consultant costs since inheriting more than half a billion dollars in contracts from the old district health boards.

Figures obtained by RNZ under the Official Information Act show that in its first 16 months of existence (1 July 2022 to 30 September 2023), Te Whatu spent more than $82m on the four largest consultancy firms.

Overall, it spent $102m on consultants in the year to July, down from $139m the year before, figures released to the New Zealand Herald show.

Margie Apa Photo: RNZ / Samuel Rillstone

Chief executive Margie Apa told Te Whatu Ora's national board this morning that its incoming budget - set before the board was formally set up - included $596m in consultant and contractor costs when it took over from the 21 district health boards.

"And we have reduced that going into this financial year by $124 million.

"Now a large chunk of that is because we've also reduced the number of contractors we have. We inherited over 1200 contractors at June 2022 and by certainly June 2023 we've reduced that right down to 621.

"And we've done that by appointing permanently to projects and roles, [because] we actually need to bring in-house a lot of those skills."

"Our spend on contractors and consultancies is a very small part of our overall costs, but something we're monitoring and managing carefully," Apa added in a statement. "We are committed to continuing to bring down the costs and we've been doing that.

"It does not make sense to retain some of the highly specialised skills that we get through contractors and consultants in house permanently. We're using these for a period and at a point in time as we build Te Whatu Ora and what we need for the future."

It would still be necessary to bring in outside expertise in areas where Te Whatu Ora did not have the capability or the processing power, such as with large IT or data projects, she said.

One example was the Holidays Act project - to pay back staff affected by the incorrect interpretation of the Holidays Act. That represented a $2 billion liability to the agency, she said.

Data released to RNZ under the Official Information Act shows the total amounts paid to the biggest consulting firms:

Between 1 July 2022 and 30 September 2023:

PWC $12,511,443.33
EY $8,499,515.75
Deloitte $47,554,716.04
KPMG $13,608,070.10

Chief financial officer Rosalie Percival said these consultants were hired to provide expert advice on developing specialist guidance and frameworks, as an alternative to Te Whatu Ora appointing specialist staff.

"This is considered logical and prudent expenditure as we strive to focus resources into delivering frontline healthcare rather than building back-office FTE numbers.

"We expect that as the organisation's structure is embedded, internal capabilities will be grown in some areas so Te Whatu Ora doesn't have to wholly rely on external consultancies for what could be considered core business."