Upton-on-line Mar 15th

Turfing out the consultants

Upton-on-line has been having some fun figuring out exactly what the new Government's attitude to consultants is. With Derek Quigley retained almost from day one to find a way of jettisoning the F-16s, the policy of doing away with consultancies always seemed to have its limits.

Only this week it was revealed that Sir Geoffrey Palmer was to be paid $40,000 for a two month project to review one of his own babies, the now distinctly middle-aged Law Commission. From midwife to mid-life crisis psychiatric expert, so to speak!

As one who has retained Sir Geoffrey's services in his ministerial past, upton-on-line knows that the money will be well spent. But so is much of the expenditure that goes to external experts. Which is why upton-on-line was alarmed by reports in The NBR a few weeks ago that an edict had gone out calling for an end to their use.

That well known freedom fighter, John Luxton MP, put down a written question to State Services Minister, Trevor Mallard, asking if any memo had been sent to any State agencies banning the use of outside consultants. "No" came back the answer with all the brevity and confidence that this clever operator always exudes.

Imagine then upton-on-line's helpless excitement when, through the ether, arrived a suitably annonymised letter from the Deputy Prime Minister, Jim Anderton, to (at least) one of his departments. Here is what it said:

The past few weeks have shown to me that the ability of the public service to provide adequate evidence-based policy advice has been materially eroded in recent years. Apparently, far too many policies have been adopted without provision for adequate accountability and without the results of them being evaluated. The Government is determined to put a stop to such sloppy administration.

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However, before it is possible to achieve this goal it is necessary to make sure that the capabilities of the public service are properly developed. This means that we must inculcate a culture of service to the public that is to the highest professional standards.

This cannot occur whilst much of the work of government is done by consultants. All the while outsiders are employed for this work their knowledge does not form part of the inherited culture of the public service and their experience is not available to guide others. The employment of consultants is contrary to the Government's overall aim of developing public sector capabilities.

This Government is determined to reduce the use of consultants and to see their use ultimately eliminated. I invite you to prepare plans for the elimination of the use of consultants in your department and for the development of replacement capabilities in-house.

I look forward to hearing about progress on the matter and would be pleased to discuss any associated issues with you when you are free to do so.

Yours sincerely,
Jim Anderton MP
Deputy Prime Minister

A question in the House was irresistible. "How long does he expect it will take Government departments to eliminate the use of consultants" upton-on-line asked battling to exude a careless sang froid in the face of such an open goal mouth.

Mr Mallard's cool response was a textbook example of how to face down a cock-up before it ups and spills itself over all and sundry. There was no such policy, he told the House, sensibly observing that it would make no sense to believe that everything could be done in-house. Rather, the Government wanted to reduce the unnecessary use of consultants. He was aware, however, that three letters had been sent that went beyond the policy pale and, on further questioning, confirmed that Mr Anderton was now in the picture and not intending to nationalise the entire consulting workforce of the country.

Upton-on-line could still not resist asking whether, in seeking to reduce the use of consultants, the Government would be providing departments with money "to enable departments to develop replacement in-house capabilities and how much are people like Derek Quigley and Sir Geoffrey Palmer likely to cost if they are to become full time public servants?"

Mr Mallard good-humouredly observed that while it might be an idea to nationalise the talents of such hot shots, he doubted whether they would be available. Upton-on-line suspects that Sir Geoffrey's annual charge out rate would be a good deal more than the $240,000 he would get if the two month Law Commission job were multiplied by six. That won't buy you even three quarters of a Treasury Secretary.

But the most telling point for public servants was Mr Mallard's freely volunteered assessment that he thought the Government could achieve what it wanted and save money by cutting down on the consultancies.

It's a pious hope and it wasn't the answer of the State Services Minister. Mr Mallard invisibly changed hats in mid answer. It was an answer, exquisitely honed in the Treasury for the Associate Finance Minister with special responsibility for "assisting … with bilaterals conducted as part of the Budget process".

There won't be any re-building of capability. The State Services Minister has handed over the reins to the fiscal police. And such is the Government's appetite for new social spending initiatives that any saving from reduced consultancies will have been spent many times over.

There is a serious point here.

As State Services Minister I was quite candid on several occasions about the impact fiscal retrenchment had had on the core public sector over more than a decade.
Some of my colleagues may not have liked it much, but I drew to the public's attention that - aside from debt servicing - the only area of public expenditure that had consistently shrunk in real terms over the decade was the core state sector. And I didn't believe it could go much further.

In the tight fiscal drought conditions lovingly maintained by Bill Birch, this admission was tantamount to a fire hydrant geysering out of control. And I don't expect some on the Right will be happy to have me remind them of it. But the truth is that the accumulated effect of assuming that there are never-ending efficiency gains to be extracted from the core public sector has led to some pretty thin capability in some areas. And it will cost something to repair.

I for one would support a state service minister who set about exercising the Crown's ownership interest a bit more intelligently by investing in the skill base of those agencies that the Crown must own. If the Government does something it should do it well. We've exited all sorts of activities governments didn't need to be involved in and pocketed good savings. But in the core agencies we'll always own, we're getting close to the bottom of the barrel.

Before I'm excommunicated for terminal sogginess, let me say that the sums involved would be eclipsed by a single item amidst the Government's ambitious spend-up. It's just a question of priorities. And this one, like the last one, doesn't seem to want to hear about those core capabilities. I suppose there are no votes in it.

If the Government wants to be taken seriously it should stop acting like an opposition and dump the headline grabbing carry-on about 'consultancies'. Some serious attention to the core state sector and the Crown's 'ownership interest' in government departments would be a real first. Mr Mallard is a sharp, competent Minister who could make it happen. And he can rely on at least one Opposition MP to support sensible, modest expenditure to bring it about.

In the meantime, the fact that Mr Anderton's ill-conceived and populist letter reached my desk suggests that this Government has started to alienate public servants whom, I should have thought, were some of its natural allies.

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