New Zealand to cut public service jobs in savings push

WELLINGTON – New Zealand expects significant savings from an overhaul of its public service, which will eliminate about 8,700 jobs, merge some government departments and extend the use of artificial intelligence.

Over the next four years, these initiatives will deliver savings of NZ$2.4 billion (S$1.8 billion), Finance Minister Nicola Willis said on May 19 in Auckland.

The government will use projected savings to help finance new spending measures due to be unveiled in next week’s budget.

Last week, Ms Willis confirmed that the government has allocated itself just NZ$2.1 billion for new initiatives, with the rest to come from savings or new revenue streams.

Since coming to power in 2023, the centre-right government has trimmed costs and reprioritised existing spending in order to afford any new initiatives. That has included reviews of back-office systems and reducing the use of consultants by government departments.

But with an election in November, Ms Willis has identified the need to do more as weak economic growth curbs revenue and forces her to eke out further savings to avoid a budget blowout.

“We’ve fixed up the basics, but so much more is needed to achieve the modern, efficient and productive public services Kiwis expect,” she said.

“In too many parts, the back-office of government still looks like an 80s relic, run on old-fashioned systems, with slow bureaucratic processes that are too often about box-ticking rather than improving outcomes.”

The government has set three key goals and a sinking lid on government agencies’ operating budgets in order to guarantee progress, Ms Willis said.

The budget reduces most agencies’ operating budgets by 2 per cent in the coming year, followed by a further 5 per cent in each of the following two years.

The government also plans to reduce the number of public servants to around 1 per cent of the working age population by 2029 from about 1.2 per cent currently, she added.

That will be an in-principle target of about 55,000 public servants, Ms Willis said. There were 63,600 in the sector at the end of 2025.

Public service agencies will be asked to come up with proposals to logically merge their existing activities, with the aim of reducing the number of departments and ministries from the current 39. Australia has 16, and Britain has 24, she added.

Mr Francisco Hernandez, spokesman for public services with the opposition Green Party, said: “Nicola Willis is committing New Zealand to arbitrary headcounts, which will eat into front-line services to balance her books, all because she lacks the courage to have an adult conversation about fixing our broken tax system.”

Referring to the US Department of Government Efficiency, he added: “These are DOGE-style libertarian fantasies right out of Elon Musk’s playbook.”

Ms Willis said the adoption of digitisation and AI will enhance services and back-office systems, making it easier and more affordable for people to interact with government agencies. BLOOMBERG