25 September 2023

NEW ZEALAND: PS pay cap to be lifted

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The New Zealand Government says it will remove the cap on Public Service numbers in an effort to reduce the half a billion dollars being spent on consultants and contractors.

Minister for State Services, Chris Hipkins said 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.

He said the estimated cost of contractors and consultants to June last year was more than NZ$550 million (A$506 million), nearly double the NZ$272 million (A$251 million) spent in 2008–09 before the cap was introduced.

“In removing the cap, this Government wants to see the Public Service rebuild its in-house capability and invest in permanent and long-term staff rather than spend millions on temporary contractors,” Mr Hipkins said.

He said the most effective way to manage the Public Service was fiscal discipline and accountability.

“Lifting the cap creates incentives for Agencies to find efficiency savings,” Mr Hipkins said.

“It’s up to Agency Chief Executives to demonstrate why they can no longer manage within existing budgets.”

The move has been welcomed by the Public Service Association (PSA), which said the cap deserved to be “relegated to the dustbin of history”.

Joint National Secretary at the PSA, Erin Polaczuk (pictured) said members had been doing more with less for too long.

“The PSA will continue to fight for a united and strong public sector, which can deliver excellent services for all New Zealanders,” Ms Polaczuk said.

Wellington, 24 June 2018

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