Nearly 9000 public sector jobs to go, government agencies to merge, Nicola Willis announces

Source: Radio New Zealand

The government has announced plans to slash public service jobs by about 14 percent over the next three years in a shake-up it says will deliver $2.4 billion of savings.

The changes announced in a pre-Budget speech delivered by Finance Minister Nicola Willis on Tuesday would result in about 8700 job losses by mid-2029.

“Historically, core public service numbers have been equivalent to about 1 percent of the population. After a period of largesse under the last government it now hovers around 1.2 percent.

“We will be tracking progress towards a numerical target of no more than 55,000 full-time equivalent public service employees by July 2029. That’s 8700 fewer than were employed in December last year,” Willis said.

There are currently just over 63,000 full-time public servants, which is a slight decrease under this coalition government from the high of approximately 65,000 in the 2024/25 year.

Willis has outlined an overhaul of the public service designed to “reduce the number of government departments, increase the use of AI and other digital tools, and deliver significant savings”.

“Businesses and households are using AI every day and, while parts of the public sector have seized the opportunity to innovate, others are still locked into outdated ways of doing things that prioritise box-ticking over outcomes,” she told a Business North Harbour audience.

“Our government is as frustrated as you are by the fragmentation and silos, the complexity, the status-quo thinking and the dangerously slow take up of digital and AI technologies.

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

The current public service operating model is reaching its limits, according to the finance minister, and “failing to meet the expectations Kiwis have in 2026, let alone what they’ll expect in 2036 and beyond”.

The government plans to put a “sinking lid on agencies’ operating budgets” over the next four years to drive progress in the three areas Willis has outlined as her priorities.

“Over the next four years these initiatives will deliver savings of $2.4b which will be re-deployed to deliver more health services, lift educational outcomes, build infrastructure and strengthen the defence force and police.

“New Zealanders expect public services that are responsive, effective and easy to use, but too often people and businesses are still navigating fragmented systems, duplication and outdated processes,” Willis said.

Public Service Minister Paul Goldsmith said the job cuts announced would be specific to core public services, and would not include teachers, doctors, nurses, other Health NZ staff, police, or defence personnel.

“Progress will be monitored regularly, with agencies expected to demonstrate improvements in productivity, delivery and value for money,” Goldsmith said.

Speaking to reporters at Parliament on Tuesday morning, Christopher Luxon said there was a “real opportunity to leverage technology” to be more efficient with taxpayer dollars.

Luxon said it would be case-by-case when it comes to what and how agencies could be amalgamated.

“There will be cases where it doesn’t make sense for it to come together, but there are also lots of cases where we have endlessly duplicated IT services, accounts payable services, lots of back office functions … and what I’ve observed coming from outside of politics is that you know the system has just been the system for 30 to 40 years, and no one ever asked the fundamental question of, right, well, why do we have 16 ministers interfacing with an organisation like MBIE.”

Having just recently visited Singapore, the prime minister said it was a good example of a country better applying AI and technology in the public service.

“Even look at the work that’s been happening in Malaysia and other parts of Southeast Asia as well.

“You’ve got people who need to purchase a house, they go around a very convoluted process, trying to prove their identity, trying to prove their income, that can be automated. You think about a Mum with an 11 and a nine-year-old, and one needs eye glasses, and she’s trying to work out her working for families tax credits. There’s a whole bunch of better ways in which we can deliver those results,” he said.

Infrastructure Minister and Hutt South MP Chris Bishop is overseeing the amalgamation of the ministries for the environment, housing and urban development, transport, and the local government functions of internal affairs.

The stand-up date for the new ministry – MCERT – is 1 July but Bishop says it will be years before the savings are seen.

“This is about setting the public service up for the future. It’s not about immediate savings in the next six months or even the next year, it’s about setting the public service up to be firstly a better partner for local government.

“One of the points I make to local government is that central government has been a useless partner with them in terms of grappling with the great challenges facing us, from housing through to climate adaptation, through to infrastructure funding and financing, we’ve been hopeless at it, and part of the reason we haven’t been very good at it is that we haven’t organised ourselves properly.

“So that is the big driver for the creation of MCERT,” he said on his way to caucus.

Bishop also pushed back on the idea that Wellington and the Hutt Valley are public service cities and would be deeply impacted by the proposed cuts.

“This idea that the Hutt Valley is just made up of public servants who get on the train in their walk shorts and go to Wellington every day for work is offensive and wrong about the Hutt Valley.

“It is an amazing place, in the same way that every suburb of Wellington is, with incredible businesses, and we’ve got to stop stereotyping Wellington as just this boring public service town. It is so much more than that, and we need to stop thinking about it like that,” Bishop said.

Labour leader Chris Hipkins said the changes on the table were “not good news for New Zealanders”.

Speaking ahead of his party’s caucus meeting on Tuesday, Hipkins said “more than half of the jobs in question are outside the Wellington region”.

“So, these are frontline people working all over the country, they’re social workers working with vulnerable kids and families, people working in our prisons, people working at our border, people working in the conservation estate, they are frontline jobs.”

Hipkins told Morning Report there were a lot of contradictions within the proposal so he wanted to see the details.

“Bigger isn’t always better, bigger government departments aren’t always more efficient than smaller departments. Some of the bigger agencies are the most bureaucratic, with the most double handling,” he said.

“So I don’t think bigger is always better.”

Hipkins isn’t against a more integrated and technology driven public service, but said there were limitations to that.

“All of those could potentially be good things, but setting arbitrary targets to potentially reduce the public service by 10,000 people. There is no way you could reduce that many people working for our public service without reducing frontline services.”

Labour proposed its own cuts to the public service in late 2023, when in government, to the tune of 2 percent.

Asked about how many jobs would have been lost then, Hipkins said the advice he had was “there were a lot of vacancies that would be unfilled, and that they would just disestablish those jobs, so they wouldn’t have resulted in people losing their jobs”.

“There would have ultimately been a disestablishment of a number of jobs,” he said.

Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.

– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Original source: https://nz.mil-osi.com/2026/05/19/nearly-9000-public-sector-jobs-to-go-government-agencies-to-merge-nicola-willis-announces/