Photo: RNZ / Angus Dreaver
Prime Minister Chris Hipkins has backed his government's spending on costly contractors, saying National needs to be transparent about its proposed cost savings.
During a state-of-the-nation speech over the weekend, National Party leader Christopher Luxon announced a policy to give families a 25 percent rebate on early childhood education - up to $3900 a year, or $75 a week - with payments capped for higher-income earners.
The party estimated the cost at $249 million a year, saying it would be paid for through $400m it expected to save by reducing the spending being done by the Labour government on consultants and contractors.
"Labour has created a gravy train for consultants through its obsession with working groups, wasteful spending and expensive public sector restructures," National's Public Service spokesperson Simeon Brown said.
"National will reduce spending on consultants and contractors, saving taxpayers $400m a year across a range of government departments and Crown entities.
"To achieve this, National will direct public sector agencies to end the culture of relying on contractors at a premium cost to do the regular jobs of public servants, stop enacting the costly and unnecessary restructures and mergers that Labour is obsessed with, and slashing the endless working groups and task forces that are synonymous with this government."
He said Hipkins as public service minister in 2018 had promised to cut spending on contractors and consultants but it had since skyrocketed to more than $1.7 billion.
Speaking to media after this week's Cabinet meeting, Hipkins acknowledged the spending had increased particularly during the Covid-19 period - but said that money was no longer being spent and could not be reprioritised as National suggested.
"A lot of temporary workforces were engaged to do particular projects including the vaccination campaign, which resulted in a lot of expenditure on contracts and consultants for a particular purpose - that money's been spent, and there's not further money budgeted to do more of it or if it is, it's at a significantly lower level than it was before."
He said almost all the projects the party put forward as wasteful spending had already been cut.
"I think [National,] they need to be more transparent about what they're not going to do in future if this is the way they're going to pay for their early childhood education policy."
He said he would be surprised if there was enough fat in the system to make the $400m of savings National was claiming.
"You'd have to find $400m worth of work that you don't want to have happen if that was the case ... ultimately those people are all doing work of some description, so if you were to say that you want the ministries and the government departments to in-house that work, that work still needs to be done.
"At the end of the day there's still going to be a bill for that.
Hipkins said he'd spent a lot of time looking at the issue, "and there are a variety of things you need to weigh up". One was that contractors were often used to fill a vacancy that would not be suitable for full-time staff, another was the nature of some workforces like transport and infrastructure.
"If you think about transport for example - Waka Kotahi or the NZTA - that's been an area of increase. That's the nature of the industry, so, those consulting engineers for example that design our roads, that's the nature of that workforce. So if the National Party want to reduce spending on roads then they should be transparent about it."
"Ministry of Education, one of the areas of growth for their consultants and contractors has been in the capital space, so consulting on school building projects."
"I'm not going to defend the consulting and contracting industry, you know, they can defend themselves. I would prefer that more of that work was in-house but I have to also acknowledge that where government departs are saying 'look, we've tried that and we can't actually get the people to do the work'. If the work needs to be done, they have to do it somehow."
He said he had been clear he wanted to see more roles brought in-house at government ministries and departments.
"The government's message hasn't changed, which is that we want to see much more reliance on in-house rather than the use of contractors and consultants. One of the reasons that we're having this debate is when we became the government we actually put in place reliable and robust reporting of the use of contractors and consultants because it didn't actually exist previously."
He said there was more progress to be made on data collection.
He rejected the suggestion his decision to cap public sector wages had added to pressure on public servants to change jobs if they wanted to be paid more.
"First of all there's not a pay freeze; within the wage restraint guidance there are specific provisions that allow for retention and recruitment issues ... I don't think the wage restraint guidelines have been a contributing factor to that."
Hipkins also criticised National's education policy, saying while he agreed with the cause - ensuring it was affordable - he was not sure the solution they put forward was the right one.
"If you look back at the history of National's track record on early childhood education I'm not sure that anyone would place a lot of trust on what they're saying now, given that during the time that they were in government they froze funding for early childhood education for the better part of nine years. The result was parents ended up paying a lot more."