Government Fails To Cut Costs In Three Key Areas

Published: Thu 11 Jul 2024 02:54 PM
The New Zealand Government public sector cost cutting appears to have failed to identify three key cost reduction areas. Trend analysis data obtained from December 2022 to June 2024, including Official Information Act (OIA) requests, has identified three areas for multi-million dollar (NZD) government cost reduction.
Analysis of Australian and United States policies and implementation for both the health and defence sectors supports data showing significant cost saving using existing technologies and programmes.
A University of Queensland article (How health economics can help radiology show value circ 2023) as well as Pathology articles from the Australian Institute of Health and Welfare both indicated cost savings seen with improved tools for interventional radiology teams. Similarly, the United States policies for government services verified potential savings for allied nations through Defence Security Cooperation Agency equipment grants. Moreover, both the Australian Public Service Commission (APSC) framework and United States government OPM FedScope guidelines for public service staffing, show improved ratios of staff to management.
Through an Official Information Act (OIA) request HNZ00019424, Trend Analysis obtained details regarding the ongoing use of the Penumbra Lightning Flash at Auckland hospital.
Use of interventional tools including Penumbra Lightning Flash and Inari in hospitals in Australia and the United States have demonstrated significant reductions in operating theatre volumes and patient recovery timeframes -- shifting procedures to the Interventional Radiology teams. Moreover, at Auckland Hospital the Penumbra Lightning Flash tool is currently used for pulmonary thrombectomy (clot removal procedures) and cardiothoracic surgeries. These same procedures in other regional hospitals require invasive surgeries with often several weeks of added recovery times.
Investing in several Penumbra Lightning Flash or Inari tools for more hospitals and improving funding for Interventional Radiology teams, the government can potentially match the multi-million dollar savings seen in similar regional hospitals including INOVA (United States).
The current cabinet is working on the new Defence Capability Plan, to be release in September 2024. The planning phase will initiate funding requirements for the Finance Minister amidst declining retention in the NZDF and in conjunction with changing requirements for defence to counteract new threats. Moreover, it will help to create improvements in coordination and interoperability with the Australian Defence Forces.
The NZDF may be a potential recipient of such grants that allow the transfer of excess military equipment directly from the Defence Security Cooperation Agency at significant cost savings.
By applying directly to the DSCA for specific types of equipment grants, the NZDF may have the potential to reduce overall acquisition and modernization costs, while also releasing millions of dollars of funds vital staffing requirements.
In New Zealand the ratio of management to staff averages 1 manager to 4 employees (1:4). New Zealand government organisations, compared with other governments such as those in Canberra (1:6) and Washington (1:10), retain among the highest manager to staff ratios.
In May 2024, the Finance Minister Hon Nicolas Willis requested ministries and agencies cut expenditures by 6.5 - 7.5 percent as a method for reducing annual public service spending.
Trend Analysis shows that high level cuts have little impact with regard to the hierarchical structures of many organisations, as seen when similar public sector cuts were made during 2011 under then Finance Minister Hon Bill English.
Trend Analysis identified the potential for substantially greater longevity for reducing annual public service spending when restructuring of department hierarchies is integral to any expenditure cuts. In such instances costs savings from public sector staffing cuts efficacy was retained even through election cycles.

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