Friday, June 22, 2018


When they were in government, National stuck an arbitrary cap on the size of the public service, ostensibly to keep costs down. It was a dishonest sham: Ministers still expected agencies to do more and more work, and so they responded by hiring hugely expensive consultants. The result: costs rose by quarter of a billion dollars. So now, Labour is ending the scam and removing the cap:

The Government will dump the cap on public servant numbers in a bid to reduce the half a billion dollars a year being spent on consultants and contractors.

"The Government has made a decision to lift the 'cap' on core public servant numbers put in place by the previous government," State Services Minister Chris Hipkins said today.

"The cap was introduced at the height of the global financial crisis but it created perverse incentives and in the following years its arbitrary nature forced the previous government to find creative ways to get around it."

The estimated cost of contractors and consultants in the year to June 2017 was more than $550 million, nearly double the $272m spent in 2008/09 before the cap was introduced.

National will no doubt wail about "costs" and "waste" (because that's ultimately what they think public servants are: "waste"). But hiring actual employees is likely to be far cheaper in the long run than outsourcing, and internalising capabilities means that they're more likely to be available when required. We'll get better public agencies from this. And then, next time they're elected, National will sack everyone again - because ultimately, they don't want better public agencies, just lower taxes for their rich mates.