$230m/yr of potential savings

April 14th, 2011 at 11:00 am by David Farrar

Tracy Watkins reports:

A new Treasury report says government agencies could save more than $230 million a year from back office functions.

The report, which follows a review of costs across the public service on things including property management, human resources, finance and ICT and found that they were higher in New Zealand than international bench marks, Finance Minister Bill English said.

“For example, the average office space per person in our public service is about 21 square metres compared with best practice in some New Zealand agencies of about 15 sq m. This is one of many areas where we believe there is room for improvement.”

That would also take some of the pressure off commercial rents in Wellington.

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39 Responses to “$230m/yr of potential savings”

  1. Brian Harmer (686 comments) says:

    I’ll accept that 15 sq m is “best practice” if you accept that best practice in the airline industry is bringing the seats as close together as possible, and if the same rule applies to all executive offices. Bear in mind that “office space per person” is not just the size of the work space allocated to individuals, but includes passage ways and utility spaces, so do’t get carried away with the idea that 15 sq m is especially generous.

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  2. magic bullet (776 comments) says:

    meh – $230 million out of 60 odd billion in annual govt spending. Sooo – we’re talking around 0.5% of total spending to be saved. Where’s the headline in that? That’s enough cash to cover 2, 300 extra people in jail though i guess. With the new three-strikes law that will be needed for sure.

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  3. gravedodger (1,426 comments) says:

    No shit sherlock, an average cattle crate would be what, 12 sq m and how many souls did Herr Himmler get in one of those.
    Must include the shared Gym, pool and bar areas.
    How many of them could work from home I wonder, using work in a very wide interpretative sense.
    Perhaps we are including the wards, theaters and classrooms, then there are the hangars barracks prisons etc.
    This sort of review could fire old Bob Jones (sorry Sir Robert) up again.

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  4. bhudson (4,720 comments) says:

    “meh – $230 million out of 60 odd billion in annual govt spending. Sooo – we’re talking around 0.5% of total spending to be saved. Where’s the headline in that?”

    And that is why Left govts are disastrous for the country.

    Glad you think $230m is a pittance MB. How much extra will you be contributing personally to avoid that cost cutting?

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  5. lastmanstanding (1,154 comments) says:

    Well so after some of us have been asking these questions for years Treasury finally tumbles to the bloddy obvious That is Governments especially Socialist governments have been Sir Bobs best friend for teh past 3 decades.

    Of course the real question is Why the hell do we need so many civil servants. They are whole Departments that are a waste of space like Wimmins Affairs et al.

    JK and Bill have to take the razor to these Send the staff on home on full pay for 6 months and tell them to get a real job.

    Government should be no more than 20% od the economy NOT the 40% it is at present

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  6. Murray (8,835 comments) says:

    How about Bigest Loser CEO Island.

    The department that makes the least savings % of its budget gets to look for a new job.

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  7. KiwiGreg (3,129 comments) says:

    I’d like to see the private sector comparisons. The easiest way to save money though is not to focus on the sq meter per person but simply to significantly reudce the number of humans sucking on the public tit, whether as “public servants” or more openly as “beneficiaries”.

    Part of this is just simple headcount reduction, the more meaningful part would be to just stop doing a pile of things and get rid of those folk.

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  8. tom hunter (3,998 comments) says:

    Congratulations.

    Now let’s see – $230 million per year saved vs. current borrowing of $350 million per week….. assuming a 5 day, 8 working hour week (8:30-5:30)…..

    …. we don’t have to start borrowing again until 9:00am on Monday morning, half an hour after starting work.

    Excellent.

    Can we switch to Aussie dollars now?

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  9. KH (686 comments) says:

    The only way to do it is reduce the number of people.
    As for the ‘reduce back office’ approach. Thats a copout.
    Reducing the front office is probably the better thing to do.
    We can do without almost anybody in the role of ‘analyst’ or ‘advisor’ in Wellington.
    That group of people who take turns presenting powerpoints to each other. In the self delusion it’s productive.
    a. Well I remember one describing his government role as obstructing the politicians to provide a balance. Pardon ?
    b. As for advice to government and ministers. Most of the time when I see them they are trying to pre -guess what the minister wants and then recommend it. Thats the only other thing they do.
    c. There also is the activity they describe as ‘workstreams’ (somewhat misnamed) that is going to ‘inform’ another different ‘workstream’ later. Remarkable what distortion of language can do to conceal ineptitude.

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  10. KiwiGreg (3,129 comments) says:

    @ KH cant agree with you, of course i’m biaised as I was a policy analyst. Believe it or not there is some real work that gets done, legislation and policy doesn’t just get pulled out of thin air.

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  11. Rick Rowling (776 comments) says:

    meh – $230 million out of 60 odd billion in annual govt spending.

    Mind the pennies, and the pounds will look after themselves.

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  12. peterwn (2,932 comments) says:

    Interesting that the health sector seemed to rate well (although it may be Ministry only). Either way some kudos due there.

    Treasury accommodation costs seem high. There would be benefits by being close to Parliament, being in ‘A’ category space (large floor plates, IT installation friendly etc) and being under one roof (which I think they are). Treasury probably has only small portion of ‘back office’ functions, so there would be little advantage in accommodating that elsewhere (compared with IRD who has shut ‘High Street’ offices and concentrated back office functions in barns like in Upper Hutt). Although I have a historic dislike of Treasury officials, I think their current accommodation is appropriate despite the high cost.

    Notice that WINZ has also moved from high profile locations it had in the Christine Rankin era (eg Manners St) to the boondocks (like Upper Willis St).

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  13. Gooner (995 comments) says:

    Bob Jones will be spewing.

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  14. Manolo (12,614 comments) says:

    Does anyone believe Bill English anymore? No, Double Dipton has lost all credibility.

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  15. stephen (4,063 comments) says:

    Believe it or not there is some real work that gets done, legislation and policy doesn’t just get pulled out of thin air.

    No way, I want Ministers constructing the basis for legislation on the back of a napkin at best, or on the back of a used coaster at worst.

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  16. bchapman (649 comments) says:

    So Treasury will be moving out to Porirua? I’d like to see that happen. Why do they need to pop over to Beehive all the time? Haven’t they heard of faxes or email?

    Similarly it would be good to get NZTA out of its Wellington ivory tower. Put them in Warkworth or Kapiti then they can at least enjoy their white elephant road projects.

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  17. Fisiani (849 comments) says:

    I worked in a hospital once where to save money every staff member was asked to suggest ways to trim the budget. They were offered 1% of any actual savings as a personal bonus. Some people were picking up big money. Ask civil servants how to save money and make it worth their while to be radical.

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  18. KH (686 comments) says:

    Somehow I suspect Bob Jones will remain correct
    That you can’t go wrong in Wellington office property.

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  19. KiwiGreg (3,129 comments) says:

    “So Treasury will be moving out to Porirua? I’d like to see that happen. Why do they need to pop over to Beehive all the time? Haven’t they heard of faxes or email? ”

    Because Ministers typically want face to face briefings. Officials need to attend select committee meetings and be available to Cabinet and Cabinet sub committees.

    I doubt very much whether moving the main policy departments away from the Beehive would be a saving.

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  20. KiwiGreg (3,129 comments) says:

    @ stephen – Trevor DeCleene once drafted changes to the FBT rules in pen in the Chamber pretty much literally on the fly.

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  21. bchapman (649 comments) says:

    KG,

    Ok so ministers find ‘face to face’ briefings nice to have- but do they really need them? I spend a lot of time of tele- and phone-conferencing, and you get used to it. Can’t our pollies and public servants learn to move with the times?

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  22. stephen (4,063 comments) says:

    KiwiGreg,

    Heh! Still, I hope no one attempts that again.

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  23. Viking2 (10,695 comments) says:

    I’ll accept that 15 sq m is “best practice”

    Be quiet fools.
    If we rquire public Servants and others to work in that small a space we will have Hans Kreik along with the protestors, complaining about how the hens are getting pecked and the fat sows can’t lie down under their desks, and there is not enough forage space and the hens are loosing their feathers. You get the drift.
    Call the SPCH. (the H stands for Humans.)

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  24. magic bullet (776 comments) says:

    Bhudson:

    It’s called having perspective. There are much more significant things for the media to be addressing in depth other than 0.5% of government spending, which is being called extraneous by a notoriously right-wing dominated government department, full of imf and world-bank type ideologues. How can they be trusted to deliver an objective report on such a matter?

    Also, how is this 0.5% alone going to make a significant impact on the country’s economy? When you think it through, it’s barely news-worthy. A dollars and cents beat up by a media that has become strangely fixated on tax cuts, small government and, well pretty much what ever the right’s PR industry want them to focus on.

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  25. KH (686 comments) says:

    Kiwigreg says about the need for people to be situated next to parliament etc.
    “Because Ministers typically want face to face briefings. Officials need to attend select committee meetings and be available to Cabinet and Cabinet sub committees.”
    Do the math KG. 20 ministers wanting face to face meetings. Say half the time.
    Does it really take 20,000 people situated right across the road to service that need.
    Most of the drones see the minister rarely. And then it’s usually on telly at 6pm.
    Mind you it does take lots of them to meet together with other analysts to endlessly speculate about what the minister might be thinking about – so they can pre-emptively recommend the same to the minister.
    I recall an extended speculative discussion one time about what Clark and Cullen might have decided over dinner. Including speculation of what the choice of red wine might mean for the decision.

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  26. KiwiGreg (3,129 comments) says:

    @ bchapman I’ve no idea if they REALLY need them, but that’s what they seem to want. You really couldnt decide in the middle of a Cabinet meeting that you wanted XYZ official and just fire up a video conference. I still fly all over the world to meet people face to face because there are some things electronic communication just cant give you.

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  27. KiwiGreg (3,129 comments) says:

    @ KH I have no idea of the actual numbers, very much doubt its 20,000, for the big policy departments like Treasury I doubt it would make sense to have one office for those who “really” need to brief Ministers at 1 the Terrace and the rest in Upper Hutt.

    It’s a pretty bizarre thing to get hung up on though. Offices have to be somewhere.

    If we are really worried about cutting spending what about getitng rid of Key so we can raise the age of “entitlement” to National Super and means test it? That’d blow $250m of rental out the water pretty quick.

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  28. Rick Rowling (776 comments) says:

    Magic Bullet said Also, how is this 0.5% alone going to make a significant impact on the country’s economy? When you think it through, it’s barely news-worthy.

    So vastly less newsworthy would be cost for Crown BMWs.

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  29. magic bullet (776 comments) says:

    Rick – if it weren’t for the right’s hypocrisy over MP expense spending, then yes.

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  30. Owen McShane (1,226 comments) says:

    Given the new restraints in eligibility for legal aid for criminal cases etc how can the Government continue to generously provide legal aid to groups llke the Environmental Defense Society (Their consultants all earn well over $20,000 a year. Well over!).
    They use taxpayers money (over two hundred thousand a year) to attack the property rights of private individuals – usually teaming up with DoC, Forest and Bird, and other “fiends of … ” groups who all get similar aid.

    See:
    http://www.rmastudies.org.nz/component/content/article/34-centre-digest/213-environmental-legal-assistance-fund-and-rma-reform

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  31. bhudson (4,720 comments) says:

    magic bullet,

    Taking $250m p.a. of unnecessary expense out of govt is not an insignificant matter. Nor is it an issue of prioritisation unless you can provide evidence as to what other actions are being set aside because of that focus.

    In a simple sense, the $250m saved here might be $250m less in borrowings, or it could be $250m spent across frontline services (or, of course, a mixture of both.) This govt’s record on public service headcount – with back office numbers reduced, but frontline numbers increased – suggests it is as much finding a means to continue with essential service investment as it is some sort of cost slashing or “penny pinching.”

    “a notoriously right-wing dominated government department, full of imf and world-bank type ideologues”

    MB, you do yourself no credit regurgitating tripe like that. The choice, however, is yours.

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  32. KiwiGreg (3,129 comments) says:

    @ Owen or more broadly why is ANY legal aid available for any purpose other than to allow the indigent poor to defend against criminal charges.

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  33. KH (686 comments) says:

    $250 million is worth worrying about and worrying at.
    Ask anybody on the average income. Who need to restrict the use of their car etc etc.
    But in New Zealand we don’t like to do the hard work.
    Note the frequent focus on the big solutions (those ones where we are going to ‘lead the world’)
    Usually in areas where we are not even able to get the small things right now.

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  34. RRM (8,988 comments) says:

    That’s almost as much as the Key Government borrows every week so that we can have tax cuts without service reductions isn’t it?

    (Is anyone here still pissy about the train set? :-) )

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  35. big bruv (12,321 comments) says:

    RRM

    I am happy to give back my tax cuts just as long as we slash $300m a week out of the welfare budget, lets start with WFF, then move on to getting rid of the DPB and then tackle long term dole bludgers.

    Do we have a deal?

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  36. bhudson (4,720 comments) says:

    Actually RRM, the borrowing is to avoid decimating WFF or removing the likes of Labour’s election bribe of interest free students. Along with Michael’s train set too of course.

    The tax cuts were intended as an economic stimulus and were noted at the time as either being revenue neutral, or, if resulting in a short term revenue shortfall, resulting from increased savings/debt retirement – being a more positive long term outcome for the country (albeit at the cost of some short term pain.) Both outcomes were signaled as positive for NZ (for different reasons of course.)

    The $250m cost cuts can be viewed likewise – an opportunity for the country to make savings, or an opportunity to invest that money elsewhere (which equates to economic development or social programmes)

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  37. Innocent bystander (163 comments) says:

    Treasury is comprised solely of back office functions. There’s $44 million of savings right there.

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  38. bhudson (4,720 comments) says:

    Oops that was “interest free student loans” above (but pretty self evident really.)

    One only has to attend a lecture to find “interest free students”

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  39. Steve (4,314 comments) says:

    15 sq metres for a public servant? fuck off!
    I suggest 1 cubic metre enclosed for 7 hours per day. You can do nothing in there, but you do nothing anyway except take taxpayers money. I mean the real taxpayers money, not you troughers

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