Dileepa Fonseka: The consultancy machine needs repairing – but who will do it?
Dileepa Fonseka is a senior Stuff journalist who writes on business and politics.
OPINION: There is a saying floating around Wellington which, like most jokes, hides an uncomfortable truth: “There are three branches of government: the legislature, the judiciary and MartinJenkins.”
You could just as easily replace the Wellington-based consultants with the big four accounting-turned-consulting firms, or the other vaguely familiar professional services firms whose names are associated with every government restructure and adorn every business case.
The increasing frequency with which such firms are associated with every government decision makes many uncomfortable, but for different reasons: for some they represent a rort on the taxpayer, running up eye-watering bills to come up with ideas that several years down the track often end up binned or mired in delays.
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For others, the appearance of these white-collar brand names on every vaguely interesting report are a symbol of a hollowed-out public service: consulting firms promise quality, independent advice – but isn’t that what the public service is supposed to provide?
It is not just the revolving list of consulting firms that prompts a degree of discomfort, but the familiar names that follow every announcement of a new agency or inquiry. Which former CEO will be the new CEO? Which knight of the realm who led the last blockbuster inquiry will lead the new one?
Someone whose name sometimes makes it on to these lists tells me: “Once you’re in the chief executive factory, you just move from station to station.” A similar phenomenon is at work with consultants, who bounce from contract to contract.
Think of it like a game of reverse musical chairs, where the number of people switching chairs stays the same but new chairs are being added rather than subtracted.
People on both sides of the political spectrum seem dissatisfied at how every initiative or project seems to be caught up in some sort of review or seventh circle of business-case hell.
But how did we get here?
During the Helen Clark and Michael Cullen era, the public service grew from a headcount of 30,004 in 2000 to 45,934 in 2008, an increase of 53%, according to figures released by the Public Service Commission.
The steep rise meant that, by the time John Key came to power, there was a lot of deep-seated resentment at the size of the bureaucracy.
So the Key government put a cap on the number of “core” public servants, which in practice meant the number increased 6% between 2008 and 2017.
However, a different trend took hold. A rising headcount within the bureaucracy commands negative headlines and outrage, but rising spending can symbolise a generous government that doesn’t mind forking out for services.
Substituting a contractor workforce for public servants keeps spending high but reduces the paper headcount of a department – even though you are effectively just paying more for the people you decided not to hire.
Between 2006 and 2018, wage and salary costs in the public sector rose 49%, while contractor spending rose 134%.
The total amount being spent on consultants grew from $278 million in 2008 to $500m in 2017, and it was far from clear whether this new way of arranging the books was more efficient than the old.
In one case, PR company Senate SHJ was paid $128,000 a year just to upload court decisions to a government website.
The staffing cap came to an end on the back of the 2017 Labour coalition government, but after this was removed the size of both the public service and the contracting workforce grew.
By then, consultants and consulting firms had hoovered up people who would otherwise have gone into the public service, while consultants had also become firmly entrenched within the culture of the Wellington public service.
There was a level of distrust within the Labour coalition government about the ideology underpinning the advice ministers were getting from public servants, and whether bureaucrats who were recruited by the National government over the previous nine years were really on their side.
Public servants who had served during the Clark years had already gone off to join or start private consulting firms, and had no intention of rejoining the bureaucracy.
Meanwhile, those public sector leaders who aspired to be part of the “CEO factory” thought it was best to keep their heads down and rely on consulting firms to break the bad news to the boss.
All of which means the people who write the business cases and reports end up disconnected from the public servants within the ministries who eventually need to drive these projects forward.
Collectively, this adds up to stasis and a lack of leadership within the bureaucracy.
But without a strong public service, how do we change this?
The mantle of public service leadership might need to be renewed, but who will lead the renewal? The apparatus of fixing things might need to be repaired, but who will fix it?
Perhaps we should farm the idea out to consultants.