New Zealand's government spent $900 million on consultants

31 May 2020 2 min. read
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New Zealand's government spent nearly $1 billion on management consultants and contractors last year.

Combined, New Zealand’s 32 core agencies spent $914 million on external professionals, slightly more than the year previous ($900 million), for a range of services. Strategy consultants help the agencies with strategic work such as business planning, business cases for new programs and policy development. Business consultants support agencies with among others the delivery of programs, restructuring and organisation change.

Meanwhile, New Zealand’s ambitious digital agenda meant that most of the spending went to IT and technology consultants, who support with designing and building systems, applications and apps. IT consultants also help the government implement and update ERP systems, needed for core operations such as workforce planning, taxation, payroll and government services to businesses and citizens. 

Other areas of expertise sourced from the private sector consulting firms, contracting organisations and independent consultants span areas such as marketing & communication, public relations, construction, real estate, procurement and finance & accounting.

New Zealand's government spent $900 million on consultants

The five biggest spending agencies accounted for nearly two thirds of the total bill, at $567 million or 62%. Inland Revenue splashed out $206 million on consultants and contractors, up $11 million year-on-year, while second largest spender the Education Ministry saw $147 million billed by externals, up $15 million on the year previous. 

Other big spending agencies include Internal Affairs, which cut spending by $1 million to $57 million, and Social Development, which cut $23 million from its external bill to $46 million. 

Following years of little transparency in external consulting and contracting bills, leading to controversy in media and politics (and leaks about agencies disguising spending), New Zealand’s government was pressured to track and disclose its spending. Consolidated reporting across its agencies kicked off a few years ago, providing public with an overall view. 

Insiders however debate the completeness of the numbers. The total is based on all work registered and classified as consultancy and contracting, but in practice, some deals are awarded on a no-bid basis and some other consulting deals can be classified elsewhere.

Spending of other public agencies, such as district health boards and municipalities, are excluded from the data, meaning that across the public sector, spending on consultants and contractors is much higher.