Nicola Willis. Photo: RNZ / Samuel Rillstone
The government says it is well ahead of its target to cut contractor and consultant spending.
The latest figures, released Friday, showed the operational spending across over 100 agencies was on track to drop to $1.34 billion by next June - just over $800 million less than it was in the middle of last year.
Public Service Minister Nicola Willis said agencies were getting the message to cut back and develop more internal expertise.
"Taxpayers are not a cash cow for consultants and contractors to line their pockets," she said in a statement on Friday.
National campaigned on cutting the spending by $400m a year, though official papers put it quite differently: that the 2024-25 operating expenses spend would be $400m lower than 2022-23.
The Public Service Commission's latest figures show $336m spent on operating expenses in the quarter.
Spending was dropping faster in the core 38 departments than the larger non-core, down over 40 percent in the quarter.
Large core spenders remained the Ministry of Education ($16m) and Ministry of Social Development ($12m) across the three months.
The non-core was braking at only about a third of this rate; for the quarter its biggest spenders were Health NZ ($153m), Defence ($18m) and police ($14m).
The Ministry of Education. Photo:
Capital spending was on top of this, and sometimes exceeded operational spending. In the latest quarter, $70m went on capital across the core agencies and $83m on operations.
Once both capital and operational spends were included, the total for the quarter across all 100-plus agencies was over $500m - but this is more than $200m less than the rate had been running at.
"I'm delighted to see the cultural switch from farming work out, to finding solutions within agencies," Willis said.
Some contractors were being taken on as permanent hires, annual reviews showed.
These new hires added to the public sector even as it shedded jobs: in this way, overall employee numbers dropped 2.2 percent in the last year by 1400 to 62,820.
This was the first actual drop in a quarter for some time. In the year to June, employee numbers actually rose 0.7 percent, or by about 400 people. Earlier, they had been on track to rise faster, by 2.5 percent.
Regarding National's manifesto target of $400m in savings per year, Willis's office said she was responsible for delivering on the government's priorities.
"As you would expect with a coalition government, those priorities differ in a number of respects from the policies on which the National, Act and New Zealand First parties campaigned."
The commission [phttps://www.publicservice.govt.nz/assets/DirectoryFile/Report-Update-on-Contractor-and-Consultant-Forecasts.pdf told Willis in July], "Agencies are currently forecasting that they will spend around $1.36 billion on contractors and consultants in 2024/25. This is around $800 million less than the $2.16 billion spent in the 2023/24 baseline year.
"The size of the forecast savings does leave margin for the target savings to be achieved."
However, large agencies like health and police could sway things, it told her.
"Expectations on these agencies to deliver government priorities may place additional pressure on their expenditure levels."
Making sure the non-core entities understood the push to cut the spending "may be especially important".
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