A failure of oversight

The theory behind contracting out services is that it will result in better performance. Ministers have said this countless times in the House, stating that the ability to penalise (and ultimately, terminate) contractors for failure will give us better public services.

Of course, this relies on those penalties actually being applied:

New information shows that the Department of Corrections let SERCO off the hook for fines that were issued for basic failures in its management of the Mt Eden Correctional Facility, the Green Party said today.

Documents from the Department of Corrections show that SERCO was issued with $100,000 in fines for breaching its contract, with regards to safety razors. The Minister, in Parliament today, admitted more fines had been issued to SERCO and then withdrawn.

“The Minister needs to tell the public why Corrections decided to fine SERCO for the breach of contract and then withdrew the fines,” said Green Party Corrections spokesperson David Clendon.

“The contract was breached, documents show the breach was upheld and yet, SERCO suffered no penalties. And today, the Minister admitted, seven more penalties were withdrawn.

And its pretty easy to see why: penalising a contractor means admitting that a failure has occurred - which runs counter to the "better performance" narrative Ministers want, so is suppressed. But what this means is that the primary justification for contracting out is nullified, and instead we simply end up paying a premium price for cover-ups and failure.