$300m saved

August 9th, 2012 at 7:00 am by David Farrar

David Fisher at NZ Herald reported:

John Ivil is the $300 million man – that’s the amount of money he and his team of public servants have saved the taxpayer in two years.

The former army logistics officer heads a team of negotiators who have turned the Government’s approach to spending money on its head.

Government departments have always taken an individual approach to buying goods and services, with $30 billion spent by agencies, hospitals, local councils and schools.

Public servants need cars, flights and office supplies, and each agency will head out into the market to try to strike the best deal with taxpayer money.

Now Mr Ivil and his team of 30 people at the Ministry of Business, Innovation and Employment promote the Government as the “customer of choice”, using the combined purchasing power to drive costs down and secure discounts.

Instead of Government departments going looking for the best deal, they now have the best deal looking for them.

Mr Ivil said his team had made $293 million in savings over the life of contracts secured so far (five to seven years).

Good stuff. Some people think that you can not save money in government without cutting services, but this is a good example that you can.
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23 Responses to “$300m saved”

  1. thedavincimode (6,871 comments) says:

    The fact that it has taken this long to implement such a fundamental and commonsense business practice is an appalling indictment on every single Government that has preceded the current one.

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  2. mudrunner (91 comments) says:

    Well done John Ivil and team.

    NZ used to have the Government Stores Board, a department of Treasury, that was sacrificed in 1986, in the spirit of devolution to let the Government department chiefs be accountable for their budgets.

    GSB government-wide leveraged central contracting was exactly the same as John Ivil’s team is doing now and maintained similar benefits. Have a look at their annual report and files at Archives NZ.

    The winners were the suppliers who made real money out of the lack of leveraged procurement that suddenly stopped being exercised by the many new buying organisations.

    The losers were the tax payers. Ah purity of doctrine.

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  3. frankflintstone (68 comments) says:

    What a terrible article. Over what period is the $30 billion spent? 300 million saved in 2 years becomes 293 million over 5-7 years when you get down a bit. What sort of clowns decided not to do this in the past? Seems a rather obvious thing to do.

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  4. Lance (2,708 comments) says:

    Oh goody
    The money saved can now be spent on land rights for gay whales

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  5. berend (1,715 comments) says:

    DPF: Some people think that you can not save money in government without cutting services

    Saved? So taxpayers are getting some of their money back? Nope. All in the blackhole and borrowing $300 million a week still.

    And the National Socialists still supporting the biggest fake PM this country has ever seen.

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  6. Viking2 (11,562 comments) says:

    mudrunner (60) Says:
    August 9th, 2012 at 7:36 am

    Well done John Ivil and team.


    GSB government-wide leveraged central contracting was exactly the same as John Ivil’s team is doing now and maintained similar benefits. Have a look at their annual report and files at Archives NZ.

    And that’s just what they did. store stuff, something like 10 years of new school desks.
    They didn’t save stuff all. It was a cushy old mans home for useless public servants. Completely unnecessary in today’s world.
    And for the stores that never made it to their supposed destination.
    A bit like the old Railways really.
    The winners were the suppliers who made real money out of the lack of leveraged procurement fiscal control that suddenly stopped being exercised by the many new buying organisations.

    The losers were the tax payers. Ah purity

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  7. Tauhei Notts (1,746 comments) says:

    Was it Roger Hall who wrote the script to a hilarious play called Gliding On that was based upon the old Government Stores Board?

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  8. RRM (10,009 comments) says:

    John Ivil is the $300 million man – that’s the amount of money he and his team of public servants have saved the taxpayer in two years.

    Proper genuine respect to Mr Ivil. $300 million is a lot of money.
    (I saved a client about $20k yesterday afternoon by moving some beams around, and I felt like I had done some pretty good work.)

    Isn’t $300 million about one weeks’ worth of Your NACTional Govt’s borrowing though? There’s a long way still to go…

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  9. trout (944 comments) says:

    Was it not the old Stores Board that had warehouses full of office desks that were made in prison workshops, not needed but were purchased anyway?

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  10. dc (144 comments) says:

    So, $293 million divided by seven years is $42 million a year, less the cost of a team of 30 bureaucrats at $3 million a year, $39 million saved out of a total yearly expenditure of $30 billion? Saving 0.0013% is the best they could do? Sorry to be harsh but that’s pathetic.

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  11. BeaB (2,144 comments) says:

    The old Govt Stores Board did some good work but when schools became self-managing they found that relationships with local suppliers often led to better products and better deals.
    Bulk-buying really only works when everyone wants the same ‘standard issue’. You need someone like Ivil who keeps hammering out the best prices, not an office full of jobsworths rubber stamping existing contracts.

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  12. RRM (10,009 comments) says:

    I don’t think Mr Ivil’s in charge of that whole $30 billion dc.

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  13. ross69 (3,652 comments) says:

    A million dollars was “saved” after the mine inspectorate group was disbanded in 1998. How’s that working out?

    http://www.stuff.co.nz/the-press/news/pike-river-disaster/5304184/Mine-inspectors-visited-occasionally-inquiry-hears

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  14. PaulL (6,044 comments) says:

    I’m dubious. This is probably good work – and measures like this mostly work in the near term by shaking up relationships and breaking old lethargies. But over time they create the same problems themselves. In particular, central purchasing bureaucracies tend to deliver one size fits all stuff, usually at a time that doesn’t suit or in a size that doesn’t suit. I’ve also worked on projects similar to this, and I’m well aware of how you go around to claim savings like this – check whether this is an actual savings v’s committed spend, or a hypothetical savings as against what we reckon might have been spent if we hadn’t done this. You know, they bit where you write down “if we hadn’t been here, probably everyone would have spent like drunken sailors, so look how much we saved”.

    So, good idea, looks to be reasonably well executed, but I don’t believe the numbers.

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  15. ross69 (3,652 comments) says:

    Meanwhile, public service jobs have been cut. I wonder how much this exercise has “saved” taxpayers.

    http://www.stuff.co.nz/dominion-post/news/politics/5598198/Timebomb-set-as-public-service-jobs-are-slashed

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  16. KiwiGreg (3,259 comments) says:

    “Meanwhile, public service jobs have been cut.”

    Nowhere near enough. As long as we have Family Commissions, retirement commissioners, and any number of taxpayer funded naggers the government hasnt cut deep enough.

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  17. ross69 (3,652 comments) says:

    Let’s not forget the cheap locomotives that KiwiRail purchased from the Chinese, causing job losses here. How’s that working out?

    http://www.odt.co.nz/news/dunedin/219406/curran-says-kiwirail-report-vindicates-concerns

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  18. dime (10,100 comments) says:

    Rrm – thought the same thing. This bought us a week.

    Course, if your crowd got in we would be in our third round of stimulus by now. There would be no benefit but labour would tell us it’s working.. The greens would have millions more spent on garbage, pie in the sky green jobs etc

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  19. tvb (4,501 comments) says:

    Years ago we had the government Stores Board which did centralised purchasing. Now we have gone full circle but I assume with some modification. I assume only big ticket items are handled centrally. In the old days one had to get a requisition for pens and paper. I assume that degree of paperwork is avoided.

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  20. Zapper (1,027 comments) says:

    One day in the distant future, ross69 will not attempt to hijack a thread. Anything bad about Labour = “but but but National did X, Y and Z which is just as bad!”

    Anything good about National = “but once upon a time, National did something that didn’t work! Sure it is nothing to do with this government but I desperately need to change the topic!”

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  21. RRM (10,009 comments) says:

    I’m not so sure about that Dime. Time and again Cullen said no to spending and instead paid down debt pretty drastically during his tenure. How many billions in red ink did we pay off again?

    (I forget but it was multi- multi- billions. Enough that “the train set” the right loves to bleat about looked like a drop of piss in a bucket by comparison… :-) )

    When I look at Labour as they are now, it makes me think how lucky the country was that Clark & Cullen kept the lunatics among them reined in…

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  22. dime (10,100 comments) says:

    The lunatics you will essentially be voting for when you vote green.

    The economy prospered despite Cullen and his envy taxes and bills hit spending.

    Remember the mini budget they had planned if they won. That would have been taxation for the job creators and stimulas.

    You also forget about Cullen gloating. I spent it all…

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  23. RRM (10,009 comments) says:

    Yes C. was a funny can’t too.

    A few one liners about “rich pricks” and he got to live inside right wingers’ heads rent-free for years… :-)

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