Public service shrinks by 2162 people in six months - Nicola Willis wants more cuts

Willis says government departments should plan to receive no new funding for cost pressures. Photo / Mark Mitchell

Public service bosses have been following the Government’s directive to slash spending, including cutting staff numbers.

New Public Service Commission figures show the public service workforce shrank by 3.3% in the first six months of 2024 to 63,537 people.

In other words, there were 2162 fewer fulltime equivalent roles across 39 departments and agencies by the end of June, compared to six months prior.

The reduction through 2024 followed a period of growth.

Indeed, the expansion of the public service in the last six months of 2023 was such that by June there were still 421 more people employed than a year earlier.

Finance Minister Nicola Willis said she expected to see further job cuts.

Earlier on Thursday she underlined her commitment to cutting spending, with the latest Crown accounts showing the Government’s books sunk further into the red in the year to June.

The deficit widened to $12.9 billion, putting the Government’s finances in a slightly worse position than the Treasury forecast at the Budget in May.

“We need to impose restraint,” Willis commented, when speaking about Government spending.

A document released to the Herald under the Official Information Act shows details how Willis updated her Cabinet colleagues on how she was getting government departments to write “Performance Plans” to assure ministers they have plans to stay within their budgets.

Willis asked ministers to agree that “the default position is that all departments should plan on the basis of no additional funding for cost pressures”.

She said she remained committed to only increasing operational expenditure by a relatively small sum - $2.4b in Budgets 2025, 2026, 2027.

“As a result of these constrained allowances, most departments will have to manage cost pressures within baselines (i.e. without additional funding) and any proposals for new spending will have to be met first by the reprioritisation of existing resources,” Willis said.

Meanwhile, departments cut contractor and consultant spending by 32%, or $293m, over the year.

“This shows the steps the Government is taking to restore discipline to public expenditure and drive more value for money are working,” Willis said.

“The latest data also reflects a shift of back-office resources to the frontline.

“There has been a 10.8% decline in the number of clerical and administrative staff and an 8.3% drop in policy advisors.

“This has been offset by increases in service delivery roles, including a 16.9% increase in contact centre workers, who are often the first point of contact for members of the public.”

Willis said the Government had made some tough decisions.

“I feel for anyone who has lost their job, but no government can live beyond its means indefinitely, and we have to restore discipline to public spending by spending taxpayers’ money as carefully as they do.”

Jenée Tibshraeny is the Herald’s Wellington business editor, based in the parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.