Nicola Willis’ first Budget as Finance Minister has revealed the extent of cuts to the public sector, with further cost savings on the cards.
Some $3.71 billion has been found, through cuts that include ministerial savings and axing programmes developed by the previous Government.
The Government has previously signalled this week’s Budget was one for the frontline.
Agencies have been chasing down cost savings, of 6.5 to 7.5 per cent on average, with thousands of roles on the line across the sector.
In the months leading up to Budget Day, thousands of roles have been disestablished or proposed to be slashed.
The larger savings target was dished out to agencies that saw an increase in fulltime equivalent (FTE) roles of greater than 50 per cent since 2017 or since the agency’s establishment.
“Agencies were asked to scrutinise this fulltime equivalent growth when considering baseline savings options for Budget 2024,” the Budget confirms.
We’ve found billions of dollars in savings and we’re using those savings to make major investments in frontline services.
— NZ National Party (@NZNationalParty) May 30, 2024
Departments have been asked to identify savings options “focused on low-value programmes, programmes that do not align to Government objectives and non-essential back-office functions including contractor and consultant spend”.
The Government had a target of finding savings of $1.5b across the public sector, something documents state has been achieved.
The Government is putting $8.74 million in operating towards a Wellington Accommodation Project for public service agencies.
The initiative would establish a project team to manage the project, seeking to find efficiencies across the office accommodation footprint.
Agencies have been considering renting out part of their offices, moving offices or merging with other offices in proposals seen by the Herald.
Crunching the numbers, some agencies have gone well above and some have fallen short of their set savings targets.
Seventeen agencies have seen a smaller baseline reduction than their savings target.
Meanwhile, six agencies have cut back more than required.
Some agencies had been made exempt from the cutting exercise but had still made savings, including the Government Communications Security Bureau (GCSB), which has cut $7.6m.
The New Zealand Security Intelligence Service (NZSIS) was exempt and has cut $3.4m.
Many other agencies had cut the exact amount required.
In the 2024/25 financial year, the Government had met its target to find $1.5 billion in cost-savings. It estimates a further $1 billion in “further savings and revenue measures,” appearing to be per year through to the 2027/28 financial year.
Read additional NZ Herald coverage of the Budget 2024 announcement
Finance Minister Nicola Willis promised the Budget was “fiscally responsible”.
“We are shifting resources out of the back office of government into the front line. We are investing in healthcare, schools and Police. We are putting New Zealanders’ money where it can make the biggest difference,” Willis said.
It was recently revealed the Ministry of Foreign Affairs and Trade (Mfat) would be relatively off the hook in terms of the cutting efforts in place across the sector.
Foreign Minister Winston Peters had cancelled deeper cuts at Mfat, which were signalled for all agencies.
Peters previously said the Government had found $15m in savings per year in Vote Foreign Affairs, from “back-office efficiencies and lower priority activities”, to the tune of $60m across the forecast period.
Prior to the release of the Budget, further cuts were signalled around some public sector agencies.
A document from the Department of Internal Affairs, seen by the Herald, reveals agency chief executive Paul James suggesting there will be a focus on savings for a number of years to come.
It quotes James as saying: “We can expect greater focus on restraint, reprioritisation, value-for-money, alignment to priorities and efficiencies for some time, possibly [three to five] years”.
Last month, the Herald revealed the Ministry of Māori Development was told to find millions in cost-savings, beyond the upcoming Budget.
The Budget Policy Statement said the Ministry of Education faces “several pressures” relating to learning support that may not be met within existing baselines and pressures.
It warns a number of reviews have led to proposals for additional support, which might require more funding, including a further rollout of learning support co-ordinators and work to address workforce pressures and vacancies.
The Crown Law Office was given a savings target of 6.5 per cent, equating to $6.6m. Budget 2024 confirms it has cut $2m.
The Department of Conservation was given a savings target of 6.5 per cent, equating to $33.8m. Budget 2024 confirms it has cut a flat $33m.
The Department of Corrections was given a savings target of 6.5 per cent, equating to $108.6m. It has found baseline savings of $110.5m. Budget 2024 confirms all savings have been retained by the agency, to support frontline services.
The Department of Internal Affairs was given a savings target of 6.5 per cent, equating to $26.2m. Budget 2024 confirms it has cut $28.1m. It expects $72.5m in further savings.
The Department of Prime Minister and Cabinet was given a savings target of 6.5 per cent, equating to $6.3m. Budget 2024 confirms it has cut $3.2m.
The Education Review Office was given a savings target of 6.5 per cent, equating to $3.2m. Budget 2024 confirms it has cut $2.5m.
The Executive Board for the Elimination of Family Violence and Sexual Violence was given a savings target of 6.5 per cent, equating to $1.3m. Budget 2024 does not confirm what has been cut, and says further savings are not applicable.
The GCSB was exempt from cuts but had found $7.6m in savings.
The Inland Revenue Department was given a savings target of 6.5 per cent, equating to $39.6m. Budget 2024 confirms it has cut $29.6m, and has plans to cut a further $9.3m.
Land Information New Zealand was given a savings target of 6.5 per cent, equating to $8.6m. Budget 2024 confirms it has cut exactly $8.6m.
The Ministry for Culture and Heritage was given a savings target of 7.5 per cent, equating to $37.5m. Budget 2024 confirms it has cut $19.6m.
The Ministry of Pacific Peoples was given a savings target of 7.5 per cent, equating to $5.6m. Budget 2024 confirms it has cut $6.4m.
The Ministry for the Environment was given a savings target of 7.5 per cent, equating to $49.1m. Budget 2024 confirms it has cut exactly that. It has signalled $44.4m of further savings.
The Ministry for Women was given a savings target of 7.5 per cent, equating to $1.1m. Budget 2024 confirms it has met that target, and cut $1.1m.
The Ministry of Business, Innovation, and Employment was given a savings target of 7.5 per cent, equating to $233.9m. Budget 2024 confirms it has cut $231.5m, and has signalled $254.2m in further savings.
The Ministry of Defence’s savings have been retained to support frontline services. It had been given a savings target of 7.5 per cent, and has saved $2m to be reinvested.
The Ministry of Education’s cost savings will also be retained and reinvested to the front line. The ministry had been given a savings target of 7.5 per cent, equating to $73.6m. Budget 2024 confirms the ministry has saved $107.2m, and $7.2m around tertiary education - a total of $114.4m. It is flagging further savings of $275m.
The Ministry of Foreign Affairs and Trade was given a savings target of 6.5 per cent, equating to $98.9m. Budget 2024 confirms it has cut $15m.
The Ministry of Health was given a savings target of 6.5 per cent, equating to $12.6m. Budget 2024 confirms it has cut exactly that - which will be reprioritised to frontline services. It is flagging $37.9m in further savings.
The Ministry of Housing and Urban Development was given a target of 7.5 per cent savings, to the tune of $108.8m. Budget 2024 confirms it has cut significantly more - a total of $391m. It plans to slash back a further $61.3m in savings.
The Ministry of Justice is part of the Justice Cluster which had a savings target of $315.1m per year. The ministry had a savings target of 6.5 per cent, equating to $80.8m. Budget 2024 confirms it has saved $47.8m.
The Ministry of Social Development has been given a savings target of 6.5 per cent, equating to $119.4m. Budget 2024 confirms it has cut $107m. It is signalling a further $84.8m.
The Ministry of Transport has been given a savings target of 7.5 per cent, equating to $38.5m. Budget 2024 confirms the agency has gone above its target, cutting $83.4m. It is signalling a further $8.3m.
The New Zealand Customs Service has been given a savings target of 6.5 per cent, to the tune of $1.2m - and has cut exactly that.
The New Zealand Defence Force’s cost savings are being reinvested. It was tasked with saving 6.5 per cent, equating to $150m. It has found $24.8m in savings.
New Zealand Police was tasked with finding 6.5 per cent in cost-savings, to be reinvested. Police is part of the Justice Cluster, which had a savings target of $315.1m a year. Police’s target was $118m and it has found $13.8m in savings.
The NZSIS did not have a cost-savings target but had saved $3.4m. It also does not have further savings expectations.
The Office of the Clerk was tasked with saving 6.5 per cent, equating to $1.6m. Budget 2024 does not confirm what has been saved.
Savings at Oranga Tamariki - Ministry for Children are being reinvested as part of the Budget. The ministry had been tasked with finding 6.5 per cent savings, equating to $95.9m. Budget 2024 confirms it has saved $79.9m to be reinvested into frontline programmes and services.
Oranga Tamariki is not flagging future savings.
The Parliamentary Counsel Office was tasked with saving 6.5 per cent, to the tune of $1.6m. The Budget does not confirm what has been saved.
The Budget also does not confirm what has been saved at the Parliamentary Service, tasked with finding 6.5 per cent savings, meaning $7.5m.
The Public Service Commission has slightly gone over its savings target. It was tasked with saving 7.5 per cent, meaning $2.7m. It has cut $2.8m.
The Serious Fraud Office, part of the Justice Cluster, had a savings target of 6.5 per cent, totalling $1.1m. Budget 2024 confirms it has saved $600,000.
Stats NZ was tasked with saving 7.5 per cent - $16.3m. Budget 2024 confirms it has saved exactly that.
The Office for Māori Crown Relations – Te Arawhiti was given a target of 6.5 per cent savings, meaning $4.5m. Budget 2024 confirms it has saved $2.7m.
Te Puni Kōkiri was tasked with saving 6.5 per cent, equating to $34.6m. Budget 2024 confirms it has saved $24.2m.
The Treasury was tasked with 6.5 per cent savings, of $9.5m. The Budget confirms it has saved $16.2m.
Budget 2024 does not confirm the savings made by the Ministry of Disabled people.
It suggests $112.5m is expected in further savings and revenue measures from “other” departments across the public sector.
Azaria Howell is a Wellington-based multimedia reporter with an eye across the region. She joined NZME in 2022 and has a keen interest in city council decisions, public service agency reform and transport.
They allege the Crown ignored Treaty obligations by not engaging with them.