NZ Treasury fishing for IT efficiencies

The New Zealand Treasury has moved to allay concerns the government has already made up its mind to outsource entire functions in the public service to individual private providers under a productivity drive dubbed "Better Public Services" revealed last week.

IT industry leaders warned such a move would risk stifling innovation and undermining smaller, locally owned service providers.

In the frame are information technology, human resources, finance, procurement and some executive and corporate services, including corporate communications.

Treasury deputy secretary Peter Mersi says international experience suggests savings of 15-30 percent might be achieved through consolidation and outsourcing. A briefing document said private sector productivity had been improving at the rate of 2 percent a year, while public sector productivity was flat or declining worldwide.

But Mersi says estimates of cost savings need to be treated with caution. The Treasury does not yet know what the public service is spending on these services or whether it may already be getting value for money.

"We may conclude that the best business decision is to continue to provide many of these services in-house with our existing technology."

Mersi says some confusion may have arisen about the Treasury's intentions, as it was considering seeking a single contractor or consortium to help benchmark the performance of a range of agencies — against one another and their peers overseas — and help Treasury draw up a business case setting out options.

That did not mean it was set on contracting single providers to carry out functions for the public service.

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