Revenue Minister Peter Dunne has defended the timing of yesterday's announcement that eight jobs are to be cut at the Inland Revenue Department in Greymouth.

Grey District Mayor Tony Kokshoorn said the timing could not be worse, coming before Christmas and quick on the heels of the redundancies of 114 Pike River Mine employees following the explosions which killed 29 men.

"When it rains it rains down here - and right now it's pouring," he told Radio New Zealand.

Mr Dunne said the proposals had been discussed with staff in Greymouth in the wake of the Pike River tragedy, however staff told him they wanted to be given certainty on their jobs "as soon as possible".

"We didn't want them to go into Christmas with that uncertainty over their heads," he told Radio New Zealand.

Mr Dunne acknowledged the cuts were a blow to the Greymouth community

"Whenever changes occur there is a blow factor."

The cuts would not be to frontline staff, Mr Dunne said.

He said staff would have the opportunity to be retrained or redeployed.

"No one has lost their jobs at this stage," he said.

"We are not closing any offices. We are reviewing our operations - this has been taken taking place over a period of time."

The job cuts in Greymouth are among 27 positions being lost across the country, with 13 in Timaru and six in Gisborne also being cut.

The Public Service Association (PSA) said the cuts were large, given there were only 22 jobs in the East Coast operation, 17 in the West Coast and 27 in Timaru.

Services in Dunedin, Whangarei, Tauranga, Rotorua, Palmerston North, Napier, Invercargill and New Plymouth may also be scaled back, PSA national secretary Richard Wagstaff said.

"The cuts for these three small sites represent a staff reduction of around 50 per cent. If this trend continues for phase two and three of IRD's restructuring more than 500 jobs could go."

Mr Wagstaff said the jobs were needed in the centres.

The Justice Ministry was also looking at removing jobs from smaller towns, he said.

"The irony is that these jobs are what IRD calls `virtual jobs' - jobs the department admits can be done anywhere but wants to move them out of the regions and into the main centres for economies of scale."

Financial arguments were also questionable, he said, given the cost of redundancies.

Labour MP Grant Robertson said the Government had promised frontline services but was instead cutting services in the regions in favour of centralisation.

IRD acting deputy commissioner, service delivery, Heather Daly, said customer needs in each community needed to be met and the changes reflected that.

"We're focusing on providing local communities with targeted services so it is easy for customers to file returns, pay tax and receive payments.

"Work not requiring face-to-face contact, such as processing and letter writing, is being grouped in larger centres allowing smaller sites to increase their focus on education and advisory services for their community."