NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Business

Public service cuts needed to help rein in government spending - Roger Partridge

NZ Herald
24 Jan, 2024 04:00 PM6 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

Finance Minister Nicola Willis. Photo / Mark Mitchell

Finance Minister Nicola Willis. Photo / Mark Mitchell

Opinion

OPINION

The New Year always brings the promise of a new beginning. But it also confronts us with last year’s headaches. The problems we may have been only too happy to consign to the back of our minds as we enjoyed a summer break with family and friends.

For the National-led Government, the list of challenges inherited in 2023 is long. But few ministers will return to the Beehive with as daunting a task as Finance Minister Nicola Willis.

Core government spending in the current year is projected to be 74 per cent higher than when Labour took office in 2017 ($140 billion, compared with $81b in 2017/2018). Adjusting for inflation brings the real percentage increase back to 39 per cent. But even still, most voters would be unable to identify improvements in core public service outcomes - think health, education, or criminal justice – that might justify this increase.

The task for the new Finance Minister is to reintroduce fiscal discipline to public sector spending, and the public service itself should be a primary target.

Advertisement
Advertise with NZME.

But first, a word or two about the context of the Finance Minister’s challenge.

Treasury’s Half Year Economic Fiscal Update (HYEFU), released just before Christmas, forecasted an overall government fiscal deficit for the five years to June 2028 of $15b.

In contrast, the incoming Labour-led Government in late 2017 was greeted with a Treasury forecast with cumulative fiscal surpluses in the five years to June 2022 of $26 billion.

Advertisement
Advertise with NZME.

Of course, a little over two years later, Covid intervened, and pandemic-related spending consigned Treasury’s 2020 fiscal forecast to the dustbin. But Covid is not to blame for the daunting deficits the Treasury now projects.

Where other OECD countries managed to reign in post-pandemic government spending, New Zealand under former Finance Minister Grant Robertson showed no such restraint. So much so that in the International Monetary Fund’s October 2023 Fiscal Monitor, New Zealand’s forecast primary government deficit featured as the third worst among advanced economies.

Willis’ mini-budget, delivered in tandem with Treasury’s HYEFU on December 20, identified savings of $7.5b over four years. But with the Government seemingly committed to National’s tax cuts promises, much more radical solutions will be required to restore stability to the Government’s finances. This column has previously identified two areas where big savings can be made: Where to wield the knife for spending cuts.

With New Zealand First as a member of the coalition Government, the first of them - retirement spending - is likely to be politically impossible.

But there should be no such political prohibition on achieving savings in the second area: the size of the public service itself.

When the Ardern Government came to office in 2017, the core public service comprised 47,252 full-time equivalent officials. Roll forward to 2023, that total had increased to a massive 63,117 FTEs, an increase of 15,865 or 34 per cent.

At the average level of public service income reported by the Public Service Commissioner of $97,200, this increased headcount translates to an increased public sector payroll cost of over $1.5b a year.

The increase in headcount and payroll cost might receive some level of approval from voters if it primarily represented increases in critical front-line staff like teachers, nurses or police. But none of these key public sector occupations are included in the numbers.

Advertisement
Advertise with NZME.

Rather, the 63,000 FTEs largely represent the public sector’s bureaucracy or administration. It is here where the big increases in headcount have occurred.

For example, the number of public service “managers” has increased from 5333 in 2017, to 8059 in 2023 (up 51 per cent); “policy analysts” from 2633 to 3949 (up 50 per cent); and ‘information professionals’ from 5437 to 9426 (up 73 per cent).

Of course, many officials do have public-facing roles. These include “inspectors and regulatory officers” and “social, health and education workers”. But, while these are two of the largest occupations within the public service, they have decreased as a proportion of the overall public service headcount. The big increases have been in management and administrative roles.

Drilling down to individual departments is also telling. Take the Ministry of Business Innovation and Employment (MBIE) as an example. From 3366 FTEs in 2017, it grew to 5832 in 2022 and to 6282 in June 2023 – an increase over six years of 87 per cent. Over that time, its management grew by 41 per cent. It now also employs more than twice the number of clerical and administrative workers.

It is the same story across practically every other government department. Employment at the Ministry of Transport is up 100 per cent, at the Ministry of Education up 64 per cent (from 2632 in 2017 to a whopping 4311) and at the Ministry for the Environment up 189 per cent.

When announcing her mini-budget, Willis rightly identified an “urgent need” for cultural change in the public sector to cut spending.

She reiterated National’s pre-election promise to get government departments to cut spending by 6.5 per cent. And she went further by saying she had asked government agencies whose staff had grown by more than 50 per cent since 2017 to cut spending by 7.5 per cent.

These cuts are too modest. Population growth since 2017 might justify some increase in the size of some parts of the core public service. But if the Finance Minister really wants to bring about a culture change within the public service, her starting point should be to return public sector headcount to 2017 levels.

As well as saving the taxpayer $1.5b a year in payroll costs, that would send a clear message to the public service about the need for public sector efficiency, productivity and fiscal restraint.

Yet, even at 2017 levels the size of the core public service may be too large.

In the first year of former Labour Prime Minister Helen Clark’s tenure as Prime Minister, public sector FTEs stood at just 29,070, less than half its current level. Since then, New Zealand’s population has grown 37 per cent from 3.8 million to 5.2 million people. Applying that escalator to the public service would result in total FTEs of only slightly under 40,000 – more than 15 per cent less than the 47,252 level in 2017.

The country functioned pretty well a little over two decades ago. Indeed, on some measures – most notably educational outcomes as measured by the international league tables – New Zealand in the year 2000 outperformed New Zealand today. One wonders how the 599 officials in the Ministry of Education at that time managed to outperform the ministry’s 4311 staff today.

For a Finance Minister committed to fiscal reform, there is little need to look beyond the Wellington bureaucracy to work out where to start.

- Written by NZ Initiative’s Roger Partridge.

Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

Latest from Business

Premium
Opinion

Sasha Borissenko: Legal insights from the Siouxsie Wiles case

15 Jun 03:00 AM
Premium
Energy

Why energy is set to be a hot topic in next year's election

15 Jun 02:00 AM
Premium
Opinion

The Ex-Files: How to access KiwiSaver funds after separation

15 Jun 12:00 AM

Audi offers a sporty spin on city driving with the A3 Sportback and S3 Sportback

sponsored
Advertisement
Advertise with NZME.

Latest from Business

Premium
Sasha Borissenko: Legal insights from the Siouxsie Wiles case

Sasha Borissenko: Legal insights from the Siouxsie Wiles case

15 Jun 03:00 AM

OPINION: The cost of doubling down.

Premium
Why energy is set to be a hot topic in next year's election

Why energy is set to be a hot topic in next year's election

15 Jun 02:00 AM
Premium
The Ex-Files: How to access KiwiSaver funds after separation

The Ex-Files: How to access KiwiSaver funds after separation

15 Jun 12:00 AM
Premium
Diana Clement: How a mindset shift can unlock financial success

Diana Clement: How a mindset shift can unlock financial success

14 Jun 09:00 PM
Gold demand soars amid global turmoil
sponsored

Gold demand soars amid global turmoil

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP