More on purchase advisors
May 6th, 2009 at 3:00 pm by David FarrarI’ve been reflecting more on the Ministerial purchase advisors, and while Labour have largely stuffed up this issue, there are a couple of aspects where the Government can be legitimately criticised.
First of all, I have to say that Labour are seriously misjudging NZ outside the beltway, if they think they are going to get any resonance by complaining about how Ministers have used some experienced experts to help cut costs in their Departments. Only the PSA think this is a bad thing. In provincal NZ, and Auckland, you could put on a parade and have these advisors celebrated for their service to NZ. It would get more people along than the Santa parade.
Simon Upton writes in the Dom Post about his experience with purchase advisors:
The country learned last week that government ministers have been employing “purchase advisers”. The scoop was portrayed in sinister tones. The advisers were “secret”, “handpicked” and had been “unmasked”. Their employment amounted to an “unusual arrangement”.
Shocked to the core, I sought clarification and was disappointed to learn that the conspiracy only ran to seven such operatives. I rather hoped there would have been more because it is an eminently sensible use of public money.
So sensible in fact (and so “unusual”) that I took the trouble to extol the virtues of this approach to Trevor Mallard back in 1999 when he succeeded me as state services minister. I strongly commended the continued use of purchase advisers, a role I – and some of my colleagues – used extensively during our decade in office.
Upton continues:
Mr Mallard didn’t apparently take much notice of my advice.
Purchase agreements, I understand, became optional and in recent times ministers have contented themselves with negotiating “statements of intent”. A decade of billowing surpluses meant that no- one had to worry too much about priorities. Ministers could afford to indulge themselves with words rather than don overalls and climb down into the engine room of the numbers.
There are those who regard the idea of ministers “purchasing” outputs as an ideological tool to undermine public service and the Public Service. For me it was completely the opposite.
Without transparently negotiated prices there was no way of resisting the call for across-the- board spending cuts. Nothing is more injurious to the professionalism of the Public Service. It is a lazy way in which ministers can make demands of their officials without taking responsibility for the consequences.
Now there is an issue about whose budget do they get paid out of? Should it be Ministerial Services or the Department whose purchase agreement they are advising on? I would have thought it would be easier to have them contracted and paid through Ministerial Services – as does Andrew Geddis. The Government says it has advice that it was proper for Departments to pick up the cost. I presume the rationale is that as the savings they identify will come out of the Departmental budgets, the costs of the purchase advisors should also be reflected there.
Also in the commercial world, when two parties are negotiating a contract, it is not unheard of for the contract to include that one party will pay for an independent advisor for the other party.
I’ve yet to see the advice the Government has as to whether or not they should be funded out of Ministerial Services or each Department. I think it was tabled in the House yesterday so would be great if someone can publicise it.
So what is my criticism of the Government on this issue? That they allowed Labour to portray this as some sort of secret, to be ashamed of. The Government should be proud they have got former state servants of such high calibre to help negotiate purchase agreements that will result in a more efficient public sector. They should have been boasting of the names and front footing what they were doing.
When in doubt, publicise it. It always looks better being released proactively by the Government rather than weeks later under the OIA.
Related posts:
- Purchase Advisors
- Listening to the advisors
- Robertson on Treasury
- The growth in Ministerial staff numbers
May 6th, 2009 at 3:08 pm
In provincal NZ, and Auckland, you could put on a parade and have these advisors celebrated for their service to NZ. It would get more people along than the Santa parade.
Yeah. People LOVE treasury secretaries.
Vote:May 6th, 2009 at 3:09 pm
It was not. There’s been a bit of an argument over it. Leave was sought for something to be tabled: you, and the member for Rimutaka, seemed to think it was advice as to why this was not a breach of the State Sector Act, however such advice was not tabled.
It wouldn’t be that enlightening, I suspect, the rationale is reasonably obvious. Section 33 of the State Sector will not have been breached because that section only applies to employees, these purchase advisers will be contractors and not employees.
Vote:May 6th, 2009 at 3:22 pm
In provincal NZ, and Auckland, you could put on a parade and have these advisors celebrated for their service to NZ. It would get more people along than the Santa parade.
Yeah. People LOVE treasury secretaries.
People love it when the Government is being restrained with their money.
Vote:May 6th, 2009 at 3:41 pm
And its great that it is using Business Roundtable experience to help provincial NZ through these hard times.
Vote:May 6th, 2009 at 3:55 pm
People love it when the Government is being restrained with their money.
They also love saying ‘why won’t the government do something?!’ (in various contexts of course).
Vote:May 6th, 2009 at 4:02 pm
Hear hear Remember the war stories Prebs set out in his books in the mid 1980s . Now some may have been embelished but after over 35 years I have seen enough in the private sector to know that waste does occur and it occurs most when there is no checks and balances.
I have my own volumes of war stories hell anyone who has spent their life at the front line will have.
JK and BE should have come out and paraded the fact ( of course after already having some good news stories to tell)
And lets face it after 9 years of the Socilaists any auditor worth their salt should be able to uncover waste aplenty.
Betcha there are lots of over priced contracts in the files just waiting to see the light of day.
You know the ones.
The pens that cost 99c at the Warehouse Stationery that cost $12.50 from the preferred supplier.
What the good citizens want to know is what happened how did it happen who did it what did it cost and whose gonna swing
And most inmportant Whats being done to stop it happening again
Because there will be a next time unless changes are made.
Politicans and civil servants are the toxic combination when it somes to value for money
Vote:May 6th, 2009 at 4:57 pm
People love it when the Government is being restrained with their money.
They also love saying ‘why won’t the government do something?!’ (in various contexts of course).
Only those dependant on the Government, who now seem to be unable or unwilling to help themselves.
Vote:May 6th, 2009 at 5:42 pm
I had an official responsible for purchase advice in my office throughout my nine years as a Minister. The three people who held the position over those years were all Treasury officials put into the office by the Treasury Secretaries. They helped reprioritise tens of millions of dollars of education, economic development and environment spending. The important point is that they were employed properly and transparently according to the State Sector Act.
Vote:May 6th, 2009 at 5:53 pm
Trevor, what’s your point?
The two advisors reported were ex-Treasury – I guess you need civil service experience to understand where the wool is.
But are you saying that the only legitimate advisors need necessarily to be currently employed civil servants? If so, why?
Vote:May 6th, 2009 at 6:01 pm
reid said
“But are you saying that the only legitimate advisors need necessarily to be currently employed civil servants? If so, why?”
jeez reid didn’t you get the monthly memo given for the past 9 years………….public sector goooood…..private……oh soo bad!
Vote:May 6th, 2009 at 6:07 pm
reid, if you read David’s introduction to this discussion he makes the following comment:
It’s the odd and secretive arrangements that have been the focus of the Opposition’s attention. If the contractors were on the MinService books then only the criticism that National had bloated Ministerial offices would be valid. By contrast, the current arrangements expose them to allegations of politicising the public sector.
My question is why isn’t Treasury’s advice sufficient? Aren’t they still giving independent advice to the Minister of Finance on the quality of line agency spending?
Vote:May 6th, 2009 at 6:09 pm
They were hired for six months or so and work from home so no need for secretaries, flash offices, etc. I was gobsmacked at the cost – less than half a million. They should go screaming off to the PSA concerning pay and the temporary status of their jobs. DPF thought they woud save 20 times their cost – that is just the beginning.
Vote:May 6th, 2009 at 6:13 pm
What this reveals as I noted http://adamsmith.wordpress.com/2009/05/05/more-power-to-the-secret-seven/
is a public service which is more interested in it’s entitlements than in Value for Money.
The PSA is running scared in my view.
Vote:May 6th, 2009 at 6:14 pm
peterwn, it’s not the quality of their advice at issue however, it’s the odd and secretive arrangements. The apparent abuse of process is no less worrying ’cause it’s cheap.
Vote:May 6th, 2009 at 6:35 pm
reid asks Trevor “are you saying that the only legitimate advisors need necessarily to be currently employed civil servants?”
In my view, advisors should be EITHER current or newly-employed civil/public servants (hiring new people for a new task is fine so long as it’s done through a open and accountable process) OR (non-public-servant) ministerial advisors funded through Ministerial Services.
The problem is that this new arrangement seems to blur the line between the two. A problem which rings even more alarm bells because of the secrecy with which it has been done.
This central issue is one of accountability and transparency — a point that DPF elides when he talks about whether it would have “easier to have them contracted and paid through Ministerial Services”. Easier or not, it would have been proper to have done so.
Which is why an Auditor-General investigation would be useful on this issue.
Vote:May 6th, 2009 at 6:41 pm
mallard@ I had an official responsible for purchase advice in my office throughout my nine years as a Minister.
1 you also had someone to tie your tie, probably your shoelaces, and zip up your fly as well, for all we know.
2 you had humphries in your office..so what?
3 The purchase advisors employed by the govt’ are also properly employed, ands saving us millions of dollars by the sound of it, probably some of the same people you employed, whats wrong with this picture bully boy?
4 These advisors are in the main with NEW ministers to assist them to identify the humphries, you needed them as a senior minister for 9 years????? oh dear bully.
You all come back now you hear.
Vote:May 6th, 2009 at 6:52 pm
In reality I don’t buy the secrecy line, English did not trumpet the move from battlements which in my view he should have done, but he clearly indicated as did Key that they were going to give spending and quality of spending a thorough going over.
The noise we are hearing is noise. In fact it is not really noise it is blether and bluster from little boy Hipkins, a political hack, who has the effrontery to label former senior public servants as political hacks. That says a lot about Hipkins and confirms Adam’s view that Labour have politicised the public service over the last 9 years. tis is confirmed by the PSA bleatings. They seem to take it as an affront that the elected government has the right to seek to establish whether the public is getting value for money for the vastly increased spend.
Vote:May 6th, 2009 at 8:48 pm
Paul, the spending during Labour’s regime did not reflect optimum quality as we review the actual outcomes achieved. For example look at health spending increase vs productivity increase.
Furthermore obviously an incumbent civil servant who cared about their career may not feel free to be as full and frank as someone who didn’t depend for their livelihood and promotion upon the Minister being happy with their view of “the plan.”
There are many more reasons as to why Treasury’s sole advice might not be sufficient, how about you giving us some reasons as to why you think it is, and why they alone are uniquely qualified to be the only people on the block capable of giving such?
Vote:May 6th, 2009 at 9:46 pm
Paul Williams:
“It’s the odd and secretive arrangements that have been the focus of the Opposition’s attention”.
For someone who was in the Labour Research Unit for a reasonable amount of time, was ‘best friends’ with Trevor Mallard and an acolyte of Jonathan Hunt, not to mention hired by H2, I cannot believe you were not aware of consistent advice given by Tsy during Labours’ tenure, that advocated independent purchase advisors. You will also be aware that Labour dismissed the idea repeatedly. The crap about this ‘bolt out of the blue idea’ being some new secretive plot from the Right is rubbish and you know it. Central agencies including SSC have been advocating purchase advisors for a decade now.
David Choat:
All I can say is as a far left leaning member of the Greens/Labour brigade we shouldn’t expect more from you than stupid conspiracy theories revolving around secret agenda’s (so 90′s). What a frigging joke. This country is on its knees once again because of the irresponsible tinkering with the economy by you and your comrade above’s hero Mickey Cullen. Fabulous we were in recession a year before anyone else. We are not weathering this storm as best we can because of Cullen’s financial genius. LOL. The only good news is that we may come out of this recession sooner than others because we went in first.
Reid: Furthermore obviously an incumbent civil servant who cared about their career may not feel free to be as full and frank as someone who didn’t depend for their livelihood and promotion upon the Minister being happy with their view of “the plan.”
Precisely the case under Labour.
Vote:May 6th, 2009 at 10:10 pm
I note Hon Trevor Mallard does not deny the thrust of Hon Simon Upton’s article this morning about purchase advisers he could have here.
Of course if Simon Upton advised him as State Services Minister personally about the goodness of using independent contract purchasing advisers and Trevor thought the idea so terribly abhorrent, improper, lacking in accountability etc, he could have removed the option of contracting these advisers; instead he did nothing, other than not exercise the option to have this advice contracted in himself (as he was free to do as both an experienced MP and Minister). Thus an option available to Ministers since 1993, subject to a publication on the Treasury website remained entirely untouched in 9yrs of the Labour Government.
I am also amused that Hon Trevor Mallard’s seconded Treasury official who acted as purchase adviser in his Ministerial Office only ever reprioritised expenditure according to Mr Mallard rather than actually find any savings. Sort of a comment on both the Government that Mr Mallard was a part of, and their times.
To my friend David Choat its hard to nail down what your actual concern is as you keep changing your story.
It’s highly unlikely that CEO’s broke s33 of the State Sector Act 1988 (as alleged by Labour) since these purchase advisers are contractors not employees. Nor is there much evidence that CEO’s were “politically pressured” (as both Labour and to a lesser extent Andrew Geddis maintain) into retaining these contractors. It would appear that the list of approved contractors from which Ministers could indicate a couple of preferences and then the CEO could contract from among those preferences, was subject to Treasury advice as to both the capability and experience of the potential advisers and the terms and conditions of the contracts. It’s also clear that the ability to engage such contractors has been an option for Ministers since 1993 – it’s not novel. It’s also clear that the experience and skill offered by the purchasing advisers isn’t widely held in the public sector; and where it is, these senior managers have their hands full already.
Then of course you growl lowly that it’s a probity issue but of course not such an obvious one that Labour could be bothered to do anything about it whilst in office; heavens by Simon Upton’s account many Labour Ministers stopped using purchasing Agreements altogether replacing them Statements of Intent (the road to hell is paved with good intentions).
But really your concern is that these purchase advisers might whisper secret political advice to Ministers and not be subject generally to the OIA (very odd). I don’t know why Ministers would want to their Departments to hire ex senior public servants to provide political advice when they have staff for that already. I also struggle to see what expertise Treasury might have to gauge the capabilities of a list of political advisers dressed up as technical experts. Its really a backhanded attack on the integrity of the contactors to do the job they are contracted to do.
Vote:May 6th, 2009 at 10:58 pm
Reasonable amount of time? I reckon I was there for about 14 months about 13 years ago. I’ve been in bars longer! Best friends with Trevor, acolyte of Jonathan, hired by H2… I certainly respect them all. Interestingly that these are the sins you list, I was just warming up…
So now that I’m thoroughly discredited, might we get back to the point? Has Hipkins examination led to them being migrated to MisServices or not?
Chris D, are you capable of making your points more briefly? It’s blog, short and sharp yeah…
Vote:May 6th, 2009 at 11:32 pm
Regardless, the real point is, a new broom’s in town.
I like their style, and hope for more. The last one didn’t work, re: the civil service and results. Instead it went into fast reverse.
Disagree?
Use your eyes.
Vote:May 6th, 2009 at 11:32 pm
Sorry Paul I should assume a short attention span and low reading age for ex Labour Research Unit flunkies esp those only lasting 14mths.
But look, the wild, somewhat hysterical and ever shifting claims of the Labour Party and its boosters do need to be comprehensively demolished. And as for David Choat, we have been back and forth in a number comments on a number of related posts on DPF’s blog over a number of days. I have found him to be intelligent.
I frankly don’t share the concern about who actually does the contracting but I do agree with DPF that Bill English should have been trumpeting the use of these contractors loudly. In the toughest times we have faced in over a decade, this was a good move by English.
Vote:May 6th, 2009 at 11:36 pm
“this was a good move by English”
But you have to admit Chris, so far, there haven’t been many others.
Fiddling, burning, Rome and “don’t scare the horses” springs to mind.
Insulting, really.
Vote:May 6th, 2009 at 11:44 pm
As opposed to former party hacks who hung on so long they got turfed out you mean Chris? No what I mean is like Oscar Wilde’s quote about not having time to write a short letter…
Wild, hysterical, boosters… yawn, make a point Chris, flailing is interesting but unsatisfying.
Hipkins has exposed this odd arrangement and asked some direct questions. David Farrar’s acknowledged the government’s managed it poorly meanwhile you’re still running ever more complicated explanations as to why the obvious solution isn’t possible. Call me parismonious, but I like straight foward answers to simple issues…
Vote:May 7th, 2009 at 6:45 am
It isn’t a secret directive by National at all, it is simple strategy from the Labour party, fed down to their colleagues at thr Standard and filtered to sympathetic/bored journalists that it is a secret conspiracy.
It’s nothing even close to it! Has Labour been honest about how they hired people when they were in power? I remember some rather shifty contracts being given to preferred contractors…. at least this hiring by National is going to save the poor taxpayers from more of Labour/EPMU greed and gluttony.
Vote:May 7th, 2009 at 8:44 am
Chris Diack,
Actually, I think I’ve been consistent to the point of being repetitive. I don’t believe I’ve ever raised the issue of a possible breach of s33 of the State Sector Act 1988. Others have, but generally as a (disputed) extension of the main point, which is whether a government ought to make departments pay to hire ministerial advisors of its choosing.
What I’m genuinely unclear on after reading Simon Upton’s article is whether the 1990s arrangements were exactly the same as today’s. i.e. were they new appointees of ministers’ choosing, did they operate outside department/Treasury accountability structures, and were they paid for by departments (rather than ministerial services). Otherwise, the same concerns as have been raised about today’s purchase advisors may not apply. (Certainly these sort of arrangements are not specified in the eight lines about purchase advisors in the 1996 Treasury report.)
It would be interesting if somebody who knows about the 1990s experience could clarify that.
I think we’re disagreeing on semantics. You seem to see ‘political advice’ as being about political strategy, ‘spin’, House matters, and the like. I’m making a distinction between public servants (‘politically neutral’) and ministerial advisors (‘politically aligned’). It’s not uncommon for Ministers to hire people with some experience and expertise in a portfolio who they know are sympathetic to what they are trying to achieve, in order to help them advance their programme in that portfolio. That’s perfectly appropriate — but should be done from that Minister’s office budget (funded thru Ministerial Services).
(I’d add that my impression is that this brief of generally helping to advance the Minister’s programme seems to be what the purchase advisors are doing in practice, rather than a narrow brief around ‘hunting out waste’ or negotiating purchase agreements.)
Vote:May 7th, 2009 at 11:20 am
David
Well Mr Hipkins did allege a breach of s33 of the State Sector Act 1988 in Parliament and both he and Hon Darren Hughes (via a point of order) are hanging out for legal advice from Treasury proving that Hon Bill English did not break the law. There probably won’t be any such advice as the allegation is preposterous.
“Tuesday 5 May 2009 (uncorrected copy)
Chris Hipkins: How can the Minister claim that the Government has complied with section 33 of the State Sector Act—which states that chief executives of a department must act independently when appointing individual employees—when the official briefing paper I have here from the Ministry of Research, Science and Technology reveals that he not only specified who was to be appointed but specified the rate at which they were to be paid?”
I suggest you look again at the Treasury document
http://www.treasury.govt.nz/publications/guidance/publicfinance/pit/pit-ch5.pdf
The distinction you make between perusing the Government’s/Minister’s programme (political in nature) and hunting out waste (politically neutral in nature) is not a distinction that Treasury makes in the document.
That is a distinction you are inventing (perhaps following the lead of Andrew Geddis).
Indeed the Treasury envisage the role of either independent contractor or departmental purchase advisers as one of taking the Government’s programme and examining the contractual offer by the Department to ensure it complies in detail.
Whilst the document does not expressly detail who contracts the independent purchase advisers, it’s pretty clear that there is unlikely to be a requirement that it is Ministerial Services via the DIA. If this were a specific requirement before using independent contractors it would be in the document. If it were a breach of the State Sector Act for CEO’s to retain a contractor from a Treasury pre approved list (and Treasury approved terms and conditions for the contact) which contains and indication of Ministerial preferences then another appointment process would be outlined in the document.
Regarding your final point, aside from Dr Graham Scott who is politically aligned with ACT but is also an extremely experienced consultant/ex Treasury Secretary and is actually providing services to Hon Bill English (National) which one of the following: Kevin Jenkins, Murray Horn, Alan Barker, Ross Tanner, or David Smythe is politically aligned and therefore chosen on that basis?
Are you serious suggesting that Dr Graham Scott was not primarily chosen for his skill and experience? Are you suggesting that Hon Bill English wants politically aligned advice from his purchase adviser?
Vote:May 8th, 2009 at 9:24 am
Chris,
I’ll try to be brief since I suspect this has now become a ‘dead thread’ . . .
As I said, “I don’t believe I’ve ever raised the issue of a possible breach of s33 of the State Sector Act 1988. Others have . . . ”
You make a reasonable argument that there is no need for the purchase advisor role to be ‘politicised’ in any way. I tend to agree. They could easily be recruited from or hired into the politically-neutral public service, not handpicked by ministers but with the minister’s desired skills and competencies taken into account, and subject to the standard public service accountabilities.
That doesn’t seem to be the approach that was taken here. Instead the approach seems to have blurred the boundaries between ‘politically neutral’ and its converse – tho I’m not sure ‘politically-aligned’ on reflection is the best term for that converse. What’s the opposite of ‘politically-neutral’ that doesn’t necessarily imply being a card-carrying party-member? Maybe ‘politically unconstrained’.
And finally, I’m not making any allegation about the personal politics of the individuals you name, I was talking about the nature of the role they are currently being contracted to undertake and what the boundaries of it are.
All stuff that I hope the Office of the Auditor-General will work through when/if they investigate the issue.
Vote: