Govt eyes NZ$236 mln in back office admin and support savings a year after Treasury report

By Alex Tarrant

Treasury says NZ$236 million of savings could be made in the NZ$1.8 billion worth of annual administration and support services spending from 33 government agencies through efficiency improvements.

The figure comes from a Treasury review and report of state sector administration and support services spending as  government looks to cut back-office costs and tighten its budget.

Finance Minister Bill English welcomed the report, saying government was “committed to moving resources from the back office to the frontline so we can deliver improved public services to taxpayers with little or no new money over the next few years”.

The report would also help inform the discussion of the government’s desire to merge certain agencies, Treasury Deputy Chief Executive Andrew Kibblewhite said.

“The report shows that the agencies spent about NZ$1.8 billion on administrative and support services in the 2009/10 financial year and that there is a significant variation in service cost, efficiency, and effectiveness across agencies,” Kibblewhite said.

Administration and support spending levels across agencies were quite variable, ranging from 3% to 36% of total organisation running costs. Some variation was attributable to agency size, as smaller agencies were more affected by fixed costs, and some variation was due to the nature of agency operations.

Functions measured included Human Resources (HR), Finance, Information and Communications Technology (ICT), Procurement, Property, and Corporate and Executive Services.

“The report concludes that making these services more efficient can save more than NZ$236 million a year and that service quality can also improve,” Kibblewhite said.

“Key opportunities include leveraging knowledge and scale across agencies; streamlining, automating, and standardising processes, and having more common systems,” he said.

The NZ$236 million in savings would come if agencies spending above the median for the various admin and support functions reduced their spending to the median level.

It was also not a net amount, so did not include the costs of moving to greater efficiencies or more streamlined processes.

The purpose of the report was not to set targets for savings, but to provide agency managers with "management information that improves transparency and scrutiny and help identify opportunities for improvement and savings," Treasury said.