$250 an hour
May 28th, 2009 at 10:00 am by David FarrarLabour are trying to make out that paying $250 an hour to a former Treasury Secretary is “appalling”.
What world do they live in? Have they ever hired a lawyer? A junior to intermediate lawyer costs $250 an hour. Partners are around $400 and hour and the top partenrs and QCs are up at $600 to $900 an hour.
And we are talking about a former Secretary of the Treasury. Someone like that would normally be costing well over $500 an hour. This is a man who has risen to the very top of his profession, and he is only charging the Government the same rate as a mid level lawyer does.
Also Labour miss the big picture – all focused on inputs. For the $45,000 maximum Graham Scott was paid, the question that should be asked is how much money he has saved? Okay to be fair to Labour they are against the Government actually being more efficient and saving money – but those of us who pay taxes generally do like such things.
I would be amazed if Scott has not identified savings of at least $4.5 million. It may in fact be ten times that. So the return on his $45,000 is somewhere between 100:1 and 1000:1.
And Labour are campaigning against this.
Related posts:
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- Labour’s $400,000 an hour filibuster
- A taxpayer funded free hour for Labour in election week
- The $600 an hour weedeater
May 28th, 2009 at 10:02 am
Savings=Job Losses.
So to summarise national is paying an already rich man an huge sum of money so he can throw staff on the dole in the middle of a recession.
Joined up government it is not!
Vote:May 28th, 2009 at 10:09 am
Well Sonic, I think we should look at the rates paid to Crown Prosecutors – once again paying already rich men (mostly) to prosecute and seek to imprison poor people. Obviously this is worse than merely paying them to put them on the street and should be opposed on moral grounds alone.
Also, after hearing the interview on National Radio this morning, it appears that he will likely bill the government for only about $10k or so by the time the contract ends. Will we have value for money for this? That is an open question, but the results will speak for themselves.
Cheers, Chris W.
Vote:May 28th, 2009 at 10:10 am
“Savings=Job Losses”
I hope so Sonic.
Vote:May 28th, 2009 at 10:10 am
Unproductive activity is unproductive activity. Its worse than useless becase paying for it can only come from the productive sector. The “job” doesn’t really exist, all the government is doing is stopping paying someone (or possibly shifting the payment from the salary and wage line to the welfare line, but at least that’s at a lower level).
You need to understand governments cant create jobs. They can destroy them pretty easily.
Vote:May 28th, 2009 at 10:17 am
“governments cant create jobs”
Firemen, teachers, Doctors, Nurses, Coastguard, Navy Army, Social Services, Police, none of them actual jobs.
The things you only can learn on Kiwiblog!
(Oh and B Bruv, one day it may be you threatened with the sack, remember Karma mate)
Vote:May 28th, 2009 at 10:19 am
His contract was capped at 22 days. You’re seriously telling me he personally found, costed and identified $4.5m of savings in 22 days? That nobody else could have found? Pfffft.
I imagine he provided some good advice and the cap on the contract means it was probably worthwhile. He would have been a set of eyes and provided guidance. But put away your 1000:1 return from that.
Vote:May 28th, 2009 at 10:21 am
$250 per hour for a typical 1200 billable hours a year for a consultant is $300,000 p.a. company income. Typically overheads are around 50% (including all the costs of employment) so this probably equivalent to around $150,000 p.a. salary, which is what a backbencher gets (putting aside all their frills and perks).
Vote:May 28th, 2009 at 10:24 am
Not just Labour who do this. The media love to do it too. They like to aggregate rates like this and produce “shock horror” headlines.
While I am not a supporter of Christine Rankin, the media analysis of the infamous charter plane and conference venue was appalling and shameful. The charter was a better deal than getting to the venue by regular airlines, and the venue was a real bargain. The only question that was worth asking was “what was the conference intended to achieve, and was it worth the quite modest cost?”
There is a puritanical streak in us all, I suspect, that likes to put the worst possible construction on any expenditure.
Vote:May 28th, 2009 at 10:28 am
Now of course part of that professional rate also includes his insurances, ACC, overheads such as secretary / use of databases / supports staff / office and and office equipment / depreciations, possibly travel and disbursements(?), and so on. We are, in other words, talking about a contractors hourly rate.
Now what I would like to know, is how the hourly rate of our trough-snufflers would turn out once one takes all these issues into account. I bet my bottom dollar, that the hourly rate of phill et al is in fact probably twice this $250.00/hr.
Then of course, as they tend to do, we’ll have half the labour caucus running around like headless chickens spouting the identical nonsense that is spoon fed to them in their little indoctrination meetings. In other words, a substantial number of hours is used on this. A conservative guess would be at least 25 labourites huffing and puffing about for say 8 hours each, makes 200 hours.
Multiply these wasted hours with their rate and you’ll find that the cost of this hot air is some $100,000 or more then twice the amount they’re so upset about, while the return is of course zilch.
Talk about contempt for the tax payer!
Vote:May 28th, 2009 at 10:29 am
“Mr Goff did not think it was reasonable.
“It’s a very high price to pay for a former ACT candidate to give advice that’s entirely predictable…”"
Have to agree with Goff there.
While I respect Graham Scott, why pay him when Roger is offering to do it for free?
Vote:May 28th, 2009 at 10:30 am
Perhaps Labour should look at it from their own point of view: If everyone was paid $20 an hour there’d be no money for Labour to hand out in welfare. Christ they’re thick. And more or less shows the direction they want NZ to go.
Vote:May 28th, 2009 at 10:31 am
$250 per hour isn’t a huge amount of money in real terms. it’s about $110k which is way less than many others of his experience would be paid. The government is getting real bang for its buck by contracting Mr Scott.
Vote:May 28th, 2009 at 10:35 am
Savings=Job Losses.
Do you really think the only thing in the Public Service budgets are wages?
Vote:May 28th, 2009 at 10:40 am
It’s a bit silly, but really just Opposition Politics 101. If Gerry Brownlee was on the other side of the House, he’d be firing around outraged press releases.
The more important issue is that Scott et al are answerable to ministers but paid out of departmental budgets. That’s whiffy.
Vote:May 28th, 2009 at 10:41 am
(Oh and B Bruv, one day it may be you threatened with the sack, remember Karma mate)
There is a difference between getting the sack and being made redundant.
Vote:May 28th, 2009 at 10:43 am
“$250 per hour isn’t a huge amount of money in real terms. it’s about $110k”
Vote:Huh? If you’re earning $250/hr you’ll make $110k gross in 11 weeks (at a 40hr week).
Even if you did a 30hr billable week with good holiday breaks etc you’re looking at $300k+ gross before expenses (which should be minimal for that line of work)
May 28th, 2009 at 10:53 am
“And Labour are campaigning against this.”
I don’t recall any first 7 months following a general election where the opposition have remained so prominent in the media.
Vote:FFS not a day goes past without Goff or some other buffoon like Cosgrove being given an unworthy headline.
The MSM must be more bitter than Labour in the change of government, (or the Nats were just lazy in opposition?)
May 28th, 2009 at 10:54 am
Blaming the media again Patrick?
You really are becoming a one trick pony these days.
Vote:May 28th, 2009 at 10:57 am
$250 an hour is less than what a top level consulting engineer charges. And engineers complain they dont get paid enough.
Most people who charge for their services with this type of model will either:
- be working for a company in which case will only see 1/3 to a 1/2 of the money
Vote:- or be working for themselves in which case they will have to pay expenses including PI insurance, and will not have a guaranteed stream of work. Generating 30hrs billable work a week consistently when working for yourself would not necessarily be that easy.
May 28th, 2009 at 10:59 am
well of course Sonic you could take it as a compliment to the Labour party?
(they seem more comfortable in opposition)
Vote:May 28th, 2009 at 11:02 am
I’ll just add it to my “Patrick blames the press” file.
If only they would stop reporting those damn facts!
Vote:May 28th, 2009 at 11:08 am
Yes they do, but unless you are able to come up with a replacement several $hundred millions the global recession has wiped off the tax revenue…*
Savings will be made through analysis done by treasury, to maximise the accuracy of these assessments it is useful to hire the skills of this guy. Savings will be made, jobs will be lost, this guy will help make sure it is done effectively for the minimum amount of disruption
* Predict your response to be: raise top income tax to 70% or 80%?
Vote:May 28th, 2009 at 11:17 am
Sonic keeps files? – (is this for the revolution Sonic?)
Vote:May 28th, 2009 at 11:20 am
Heck why stop there? Redbaiter would probably pay the government a fairly substantial fee to be able to implement public sector reform and deliver massive savings, but he isn’t going to get the job either.
Vote:May 28th, 2009 at 11:21 am
garethw have a look back at my earlier post. It is important to understand the difference between what a company earns from supplying a service and what it pays its employees.
Vote:May 28th, 2009 at 11:36 am
Similar to what happened with a Labour-planned conference that got binned when National got in if I recall correctly…?
Vote:May 28th, 2009 at 11:43 am
Fair enough Simon, but like I said, a private Govt advisor isn’t going to be incurring huge expense against that rate.
Vote:May 28th, 2009 at 11:52 am
I seem to recall that following the election of the last Liabour Goverment the rate for consultants was capped by MS CLARK at $1,000 a day but they then allowed an exception for David CAYGILL who was paid $2,000 a day. Roughly the same as Mr SCOTT is getting, and CAYGILL has been on the Public Tit one way or another ever since.
Vote:May 28th, 2009 at 11:57 am
Sonic – i think to think that if i were working for an inefficiant organisation and my job was basically bullshit.. id leave! i wouldnt need to be made redundant! maybe some of these people should have some goddam pride
if there are 2 people doing one job.. then one needs to go. simple.
Vote:May 28th, 2009 at 12:11 pm
I’d suppose for someone on minimum wage these amounts look excessive.
The thing labourites don’t understand, is that these figures are the ‘norm’ for educated people.
You stuff around at school and end up on minimum wage then stiff titties bub!!!
Vote:May 28th, 2009 at 12:23 pm
My charge out rate is $210 going to $260 next month, and I only have 2 years experience in my profession. Pretty classic call.
Mind you my pay is 10% of that.
Vote:May 28th, 2009 at 12:25 pm
“i think to think that if i were working for an inefficiant organisation and my job was basically bullshit.. id leave!”
What if some failed hack politician wanted to sack you and your friends to justify his ideology of “private good, public bad”?
Vote:May 28th, 2009 at 12:27 pm
$250 an hour – peanuts! (Cue the garbled song of the tui)
Vote:May 28th, 2009 at 12:29 pm
Blaming the private sector again Sonic?
You really are a one trick pony.
Vote:May 28th, 2009 at 12:38 pm
BTW – I do like how these comments appear in the Recent Comments section. Sadly “unaha-closp on $250 an hour” is not an accurate statement.
Vote:May 28th, 2009 at 12:40 pm
garethw, your 10:43.
Vote:er mea culpa, calculator error compounded by the typist i.e me.
Still after a general discussion on charge out rates for people in my profession in suburban Auckland the general consensus was that 300-340 per hour was an appropriate hourly rate for what we do. Depending on gearing the return is 30-40% of the annualised gross income. In town as DPF notes charge out rates for partners are far higher.
So even though Mr Scott may have less in the way of outgoings hand therefore gets more cash in his pocket he still represents damn good value for some-one of his immense experience.
May 28th, 2009 at 12:43 pm
I was blaming failed ACT party politicians Patrick, do try and keep up.
Vote:May 28th, 2009 at 12:43 pm
sonic (2248) Vote: 3 16 Says:
May 28th, 2009 at 10:17 am
“governments cant create jobs”
Firemen, teachers, Doctors, Nurses, Coastguard, Navy Army, Social Services, Police, none of them actual jobs.
The things you only can learn on Kiwiblog!
(Oh and B Bruv, one day it may be you threatened with the sack, remember Karma mate)
Sonic – how did the Government create those jobs??
There is a vast difference between choosing to use the public sector to manage these areas and the Government somehow creating these professions.
The point you ignore is job creation is driven from individuals with talent, drive, imagination and entrepreneurial skills.
This country does not have a great record at admiring these skill sets (they are all rich bastards)
Vote:May 28th, 2009 at 1:03 pm
“I would be amazed if Scott has not identified savings of at least $4.5 million. It may in fact be ten times that. So the return on his $45,000 is somewhere between 100:1 and 1000:1.”
Has this been reported? Where?
Should those of us who have to work for a couple of full days to earn $250 just accept the word of our capitalist masters that a treasury secretary is “worth” 16 of us?
Vote:May 28th, 2009 at 1:05 pm
Treasury deals with billions of dollars. You upsize the drink and fries for an extra dollar.
Vote:May 28th, 2009 at 1:06 pm
Dr Scott represents incredible value for money. I compare what he has been paid to what the lawyers got in the Neo Glassie case where lead Counsel got in the region of $90,000 EACH. The public benefit in what Dr Scott did vastly exceeds that payment. I would be amazed if Labour got any traction out of this matter.
Vote:May 28th, 2009 at 1:07 pm
Kimble – your efforts to reinforce the “rich people are smug arrogant pricks” meme is noted. Does not really answer my question however.
(And no I am not in fast food!)
Vote:May 28th, 2009 at 1:12 pm
It was an economic point Ratbiter, nothing to do with smugness. Let me spell it out for you.
If he did save any money, which is what he is expected to do, then he would have saved more than 16 times what you would in your job.
Simply because of the amounts involved.
Vote:May 28th, 2009 at 1:25 pm
Kimble – thank you for spelling it out.
Amazing what a money-centric set of values we have… I wonder how long the former treasury secretary could continue saving us millions if he had nothing to eat?
Vote:May 28th, 2009 at 1:31 pm
chrisw76 at 10.09am: I don’t know what the relevance there is, but most crown prosecutors these days are women. If you are referring to the Crown Solicitors themselves then you are more correct. Their charge out rate to the Justice Department is $216 including GST per hour. Much better than a senior barrister doing exactly the same case on legal aid (but without the cops helping) of $183 including GST per hour.
But if the private sector is willing to pay between $200 and $500 plus GST per hour for legal advice, and as DPF pointed out even more for QC’s (see the Herald on the decision on the Akld Motorway shooting- John Haigh would have cost them a fortune) then it seems to me that $250 per hour is cheap if millions of dollars are going to be saved.
In the UK, top tax barristers are able to charge up to 3000 pounds an hour, and get it, for their advice that saves private companies similar amounts of money. I think that the issue here is that we as a country are still not up to admitting just what people are truly worth in the global marketplace today. Go to Australia and you will see that they have a far more realistic view of such things.
Vote:May 28th, 2009 at 1:45 pm
Well yeah, but in the UK financial advisors were able to charge up to 0.5% of the capital and get it for losing their clients 50 or 60 times that amount.
Vote:May 28th, 2009 at 1:52 pm
Patrick Starr (2357) Vote: 4 0 Says:
May 28th, 2009 at 11:17 am
Sonic keeps files? – (is this for the revolution Sonic?)
Yes Patrick, Sonic does keep file’s – 2 of them – one labelled WINZ Benefits the other Labour Good National Bad both being very very thick like their owner.
Vote:May 28th, 2009 at 8:32 pm
John Whitehead and Alan Bollard’s salary around $550,000 per year each.
They work 45 weeks a year (minus 5 weeks annual leave and 2 weeks for public holidays).
Hourly rate: $305.
They still get paid $305 an hour when they have morning tea or read the news or attend pointless meetings. Graham Scott doesn’t.
Vote:May 28th, 2009 at 9:55 pm
Most revealing string.
Vote:The Economist once wrote New Zealanders have an infinite capacity to think small. How true.
Graham Scott is cheap at the price and I, for one, expect he will deliver many times value for money – or will decide NOT to charge his full contract amount ‘entitlement’ – as is the case for many (most?) true professionals.
He is one – and rightly, so recognised
May 29th, 2009 at 8:38 am
So, David, you haven’t actually asked Graham Scott what he’s done to earn $250 an hour? Just because someone is paid that sum does not mean they have earnt it. There’s a subtle difference. Just witness the huge sums of money paid to CEOs and business executives in the US, even when the companies they head are going down the gurgler.
> They still get paid $305 an hour when they have morning tea or read the news or attend pointless meetings. Graham Scott doesn’t.
What, Scott doesn’t have morning tea or read the newspaper? Yeah, right.
Vote:May 29th, 2009 at 8:41 am
> The thing labourites don’t understand, is that these figures are the ‘norm’ for educated people.
And even for Christine Rankin.
Vote:May 29th, 2009 at 9:45 am
Moaning report asked whether this was Scott’s going rate. He replied that it was a 70% discount on his normal rate!
Vote:Goff spouted about how terrible it was to pay a ‘Political Advisor’ this much, and wasn’t corrected by the interviewer. Scott noted that he was a Purchasing Advisor, nothing to do with Political advice. Goff must have amnesia about how much his government spent per hour on many advisors.
May 29th, 2009 at 12:41 pm
“governments cant create jobs”
Firemen, teachers, Doctors, Nurses, Coastguard, Navy Army, Social Services, Police, none of them actual jobs.
The things you only can learn on Kiwiblog!
(Oh and B Bruv, one day it may be you threatened with the sack, remember Karma mate)”
Those jobs are created by the market….there is a demand for those services so the market creates them…..either provided by the State (which is created/maintained by the market to serve the market)…Military,Police and Law….or the market itself….everything else….ideally.
Vote:May 29th, 2009 at 12:46 pm
“Those jobs are created by the market….there is a demand for those services so the market creates them”
No the state creates them because the market could never deliver a fire brigade for example. If there is no profit to be made the market will not provide anything my little libertarian chum.
Been to a public park lately? Tell us how your beloved market could provide them?
Vote: