4 October 2011
 
 Growing concern about the Eurozone crisis and the bankrupt European banking system spilling worldwide is niggling away at confidence in  here.   The likelihood is that measures taken in the United Kingdom, Ireland and United States to reduce the size of government  will be replicated in New Zealand.  
 
The size of agencies will inevitably diminish as budgets are reduced.  The capping data published last month by State Services Commission indicates that there was a reduction of more than 6% in FTE numbers in core government agencies over the 18 months to June 2011. More than 70% (1823) involved redundancies. As redundancies have unwelcome costs, agencies will resort to short (and often not so short) term contractors to get tasks completed. The extent to which this option meets a chief executives’ statutory duty to manage their department in an efficient, effective and economical way, is debatable.
 
Findings by the Project on Government Oversight into the US Federal Government are that contractors cost billions of dollars more than equivalent permanent staff. Research into 35 different occupational categories disclosed that the annual costs for contractors were significantly greater than for employees in all but 2 categories. Packages for some contracted lawyers were 3 times those paid to equivalent federal employees.  On average outsourcing a job costs twice as much as having it performed by permanent staff.
 
 
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