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• The Government’s expected to exceed its $400m target on cutting contractor and consultant spending, compared to the 2023/24 financial year.
• Health New Zealand is forecasting a $204m cut compared to that financial year, making up more than half of the Government’s on-track goal.
• The public health agency has been using contractors to fill vacant roles, something the Association of Salaried Medical Specialists is opposing.

Half of the Government’s on-track target to cut $400 million of spending on contractors and consultants is set to come from just one agency.

Health New Zealand Te Whatu Ora is aiming to keep the scalpel close to contractor and consultant spending amidst the Government’s savings drive.

It’s forecasting a full-year spend on contractors and consultants of $447m, a reduction of $204m compared to what was spent in the 2023/24 financial year.

The Government department had budgeted $290.8m on contractors and consultants for the 2024/25 financial year. In the year to February, Health NZ spent $338m on contractors and consultants.

“The spend above budget in contractors is partially offset by underspend in personnel costs where vacancies have been covered by contractors (including locums)‚” Health NZ’s Interim Chief Human Resources Officer Fiona McCarthy said in a statement.

A majority of Health NZ’s spend on contractors and consultants in the current financial year has been on “clinical staff, specialists for Holidays Act Remediation work, digital and infrastructure initiatives,” McCarthy added.

Health New Zealand’s spent above budget in contractors was said to have been partially offset by underspend in personnel costs, where vacancies were covered by contractors.

The Government department blamed a global shortage of health workers in specific clinical areas as a reason why it has to use contractors to maintain service delivery, rather than employing permanent medical specialists which it said it would rather do.

Association of Salaried Medical Specialists Executive Director Sarah Dalton questioned why the agency did not put more investment into finding salaried staff, rather than employing locums.

“The cost of investing in permanent salaried staff is absolutely known to pay off. It is cheaper than employing locums - it provides more certainty,” Dalton argued.

“We want to see permanently-appointed doctors come here and work and stay. We want more New Zealand-trained graduates staying and we want to bring in overseas-trained doctors to work here as well,” she added, suggesting better working conditions would attract more doctors.

Minister of Health Simeon Brown said it was his expectation that all functions of the public health agency provided or enabled frontline services to deliver healthcare to Kiwis.

The Minister called-out Labour’s spending on contractors and consultants in the wider public sector, saying it “ballooned” under the previous Government.

Brown said Health NZ was reducing its contractor and consultant spend, “in line with Government expectations”.

More clarity around the health agency’s budget comes soon after an independent report on Health NZ’s financial management, which outlined significant concerns.

The Deloitte report found financial reporting took between 12 to 15 days, and five days to analyse on average.

Specific issues were pointed out about Health NZ’s prior use of a singular Excel spreadsheet to track billions of dollars of public expenditure.

Health NZ had previously admitted there were “many factors at play” regarding an apparent loss of financial control.