A union representing public servants says up to 50 jobs will be lost from Te Puni Kokiri, the Crown's principal adviser on Maori issues.
The Public Services Association said staff were shocked when they were told yesterday of the cuts.
"Like other government departments, TPK has already suffered significant cuts, but this is a relatively small agency that does a big job," PSA national secretary Brenda Pilott said.
"Over 60 positions have gone in the past three years and $8 million cut from its budget. We understand the department has made $3 million in savings in a range of areas like hiring fewer consultants," she said in a statement.
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Ms Pilott said chief executive Leith Comer told staff in a briefing yesterday that there was a shortfall of $5 million and the agency was looking to find that by cutting jobs.
Mr Comer told TVNZ he had been speaking to staff about the aims and ambitions for the department under the new Government.
" ... I did say to them we would have to do this with fewer resources".
Maori Affairs Minister Pita Sharples said Te Puni Kokiri staff had been briefed on "efficiency" measures.
"How the ministry manages their fiscal pressures and efficiency dividend is, of course, an operational matter for management. I expect to be consulted on the chief executive's proposals for how Te Puni Kokiri continues to deliver the most effective services to the public, within the budget they have been allocated," he said.
Ms Pilott said the cuts would impact heavily on the advocacy, social and development work the agency did on behalf of Maori.
"TPK provides a Maori perspective on all policies that Government is considering and its regional networks are important in keeping that advice grounded. Just this week we have seen TPK move quickly into action over issues to do with Treaty principles and asset sales," she said.