29 June 2022
Polly
[FYI request #19577 email]
Official Information Request
Our Ref: 2022-0073
Dear Polly
I refer to your official information request received on 2 June 2022 where you asked:
“According to recent answers to parliament questions, the health sector Transition unit inside
DPMC appears to have spent more than $13mil ion on private sector business consultants to
provide policy advice to Ministers.
1. What systems does the public service commission have in place to ensure the quality of
advice provided to ministers, when branches of agencies are lead, managed and staffed
primarily by private sector consultants?
2. What steps is PSC taking to protect against perceptions of corruption in the public
service in situations where a private sector business consultant working to lead a team
in the public service channels more than $10m to their own private sector company?
3.
What steps is the PSC taking to address the growing reliance on private sector
consultants to provide core public service functions, with significant funding and
workforce flowing to private sector companies at the expense of growing and building
capacity and capability in the public sector, and significant differential in pay for staff.”
Our Response
Under the Public Service Act 2020, Chief Executives of individual agencies are responsible for (among
other things) providing advice to Ministers and supporting their Minister to act as a good steward for
the public interest. This responsibility is reinforced in al chief executive performance expectations
set by Te Kawa Mataaho Public Service Commission (the Commission), which includes the
requirement to “provide high-quality advice and support your Minister to act as a good steward of the
public interest”.
The New Zealand Public Service is held in high regard and ranks wel across a range of international
integrity measures. That reputation depends on our ability to build and maintain a high trust, strong
public management system, and a workplace culture that promotes integrity and ethics as central to
our values and work. Every public servant has a part to play.
Te Kawa Mataaho | Public Service Commission (the Commission) has three main roles in leading the
public sector in al matters related to integrity and conduct:
•
Setting standards of integrity and conduct that apply to most public sector agencies.
• Providing advice and guidance to staff on matters of integrity and conduct; and
• Investigating matters of integrity and conduct in the public sector
In order to operate effectively in our communities and make a difference, the Public Service needs to
have the trust and confidence of New Zealanders. To maintain this trust and confidence, we need to
be able to show we are trustworthy, that we act in the interests of New Zealand and its people.
OECD evidence shows that public service values, such as integrity, fairness, and openness are strong
predictors of public trust. Integrity is the single largest driver of public trust. In addition, the
competence of the Public Service is critical. We must be responsive and reliable, as well as
anticipating new needs.
Te Kawa Mataaho has explored the drivers of public trust in New Zealand. We found that experiencing
services that met needs, being treated fairly, experiencing reliable services, and having public
servants admit responsibility when mistakes are made were key drivers of trust.
The Public Service Commissioner as mentioned above is responsible for setting standards of integrity
and conduct across most of the public sector. The Commissioner has done this in a code of conduct
for the public sector, cal ed the Standards of Integrity and Conduct (the Code). The Code has been
applied to Public Service departments. Staff in those organisations must comply with the standards
in the code and cannot contract out of those obligations by engaging contractors. The Commission
provides advice and guidance to agencies on the matters related to integrity and conduct which also
includes managing conflict of interests, can be found here: Integrity and conduct
Contractors and Consultants
In 2018, the Government announced that it wanted to build more capability in the Public Service
workforce and reduce reliance on contractors and consultants. Part of this was the Government’s
decision to lift the cap on the number of public servants in the workforce. Since then, the Government
has invested more in the capability of the Public Service, which has resulted in growth in the size of
the workforce.
Up until 2018, there was no consistent definition for a contractor and consultant. Neither was there
any consistency or transparency in the way the use of contractors and consultants were reported.
In 2019, the Public Service Commissioner discontinued the way agencies previously reported data on
contractors and consultants and introduced for the first time a new consistent method that more
accurately shows how much the Public Service is relying on contractors and consultants each year. It
measures the percentage of operating expenditure on contractors and consultants as a share of total
Public Service workforce expenditure.
The new reporting is about getting the size of the Public Service right and finding the right balance
between the number of ful time employees and contractors and consultants.
Government agencies are committed to building capability within the Public Service and being open
and transparent about how much money is spent on contractors and consultants. This is why the
Commission is annual y releasing information on contractor and consultant expenditure and has
published Guidance to support consistent agency reporting.
In 2020/21, Public Service agencies spent a total of $939.1 mil ion on contractors and consultants.
This was a decrease of 3.0% on the 2019/20 spend of $967.9 million, with the decrease driven by a
decrease in spending at Inland Revenue, as the agency continues to right-size fol owing
implementation of their Business Transformation Programme. Total expenditure comprises
operational expenditure of $603.4 mil ion (down 1.0 % from $609.4 mil ion in 2019/120) and capital
expenditure of $335.6 mil ion (down 6.4 % from $358.5 mil ion in 2019/20).
The operating expenditure on contractors and consultants as a share of total Public Service workforce
expenditure has been declining consistently since 2019, dropping from 13.4% in 2017/18 to 11.3% last
year and down to 10.3% for the 2020/21 financial year.
This reduction was due to contractor and consultant operating expenditure increasing at a slower
rate over the past year than total workforce spend. This measure represents the balance between
using external resources and building capacity and capability in the Public Service.
Contractors and consultants are useful to bring in specialist expertise, or to provide additional
capacity for short durations to efficiently manage peaks in workload, so from time to time this rate
may also increase
We wil not constrain legitimate contractor and consultant expenditure, especial y where this
expenditure is appropriate to deliver value. However, we expect agencies to review their options and
procurement policies to align with the expectations to invest in public servants.
If you wish to discuss this response with us, please feel free to contact
[email address]. You have the right to seek an investigation and review by the Ombudsman of this decision.
Information about how to make a complaint is available at
www.ombudsman.parliament.nz or
freephone 0800 802 602.
Please note that we intend to publish this letter (with your personal details removed) on the
Commission’s website.
Yours sincerely
Nicky Dirks
Manager – Ministerial and Executive Services
Te Kawa Mataaho Public Service Commission
