Government spending cuts force DIA to contract out critical legal work

Commercial work undertaken by a Department of Internal Affairs’ legal team will be fully outsourced to private law firms under proposed job cuts to meet the Government’s drive for spending cuts.

“How does fattening the profits of law firms make sense when the Government is trying to cut spending? This is short-sighted and will end up costing taxpayers more in the long run,” said Duane Leo, National Secretary for the Public Service Association Te Pūkenga Here Tikanga Mahi.

The DIA today announced its proposals to cut jobs in its Te Urungi, Māori, Strategy and Performance branch, which will see 18 roles disestablished in the:

  • Legal team: where five net roles would be disestablished, of which 2 are vacant
  • Enterprise Portfolio Management Office (EPMO): where nine net roles would be disestablished, of which five are vacant
  • Communications team: where four net roles would be disestablished.

Six roles are proposed to be disestablished in the legal team- five in the Commercial and Corporate team – and one new role created. The DIA is proposing to fully outsource the commercial work.

This work includes contracts for goods and services, procurement documents, licensing, funding arrangements, intellectual property and copyright issues, and confidentiality agreements.

Some commercial and corporate work is already outsourced, and the department has standardised contracts and agreement templates for lower value work. However, the change proposal says outsourcing carries the risk that the department would get less favourable terms in contracts and funding arrangements. It might also increase the costs for projects and programmes that have to pay for external legal advice.

“Our view is that this legal work is clearly needed and should be retained in-house. The Government promised to clamp down on contractor spending so how does this make sense? This is spending more on contractors and consultants, not less,” Leo says.

DIA has previously announced it is proposing to disestablish nine roles in the National Library. Other announcements for other DIA branches are expected over the next few weeks to meet the Government’s requirement that the DIA reduce spending of its Crown funded activities by 6.5%.

“Changes like these hollow out the core capability of the public service and its ability to deliver for New Zealanders because of the Government’s choice to fund tax relief for landlords and others,” said Duane Leo.

The DIA’s EPMO ensures projects are properly planned and prioritised with the focus on strategy led investment. It also provides advice, support, guidance and reporting on DIA investment projects.

To achieve the proposed savings in the EPMO, the office would only review projects with a budget of more than $2 million. The current threshold is for projects with a capital expenditure of more than $100,000 or operational expenditure of more than $150,000. The office would also reduce its investment planning cycle from a six-month cycle to carrying out the planning yearly.

The change proposal says these changes would mean the DIA was taking on additional risk in planning, delivery and compliance for projects worth less than $2 million.

Leo said the increased risks to projects identified in the change proposal could mean any potential savings may turn out to be a false economy if project costs blew out because of a lack of oversight.

“What we see here is that the Government’s rushed cost cutting drive will have real consequences down the track – a smart Government focused on efficiency would have taken the time to get it right. But we are now seeing the reality of this blunt approach and New Zealand will be worse off,” said Duane Leo.

/Public Release. View in full here.