Ministry of Social Development faces at least $14 million in redundancy costs from job cuts

• The Ministry of Social Development is paying out $14 million in voluntary redundancies.
• Budget 2024 documents reveal a $107 million cut and a future $84.4 million savings target.
• Redundancy impacts were reviewed with feedback, involving discussions with the Public Service Association.

The Ministry of Social Development is set to pay out at least $14 million to staff who have applied for voluntary redundancies as part of its cost-savings exercise.

Just last week, MSD confirmed it would cut 86 roles, on top of approving 218 applications for voluntary redundancies. The agency had been tasked with a savings target of 6.5%, which Budget 2024 documents confirm equates to $119.4m.

Budget 2024 confirms the Ministry of Social Development cut $107m from its books, and has signalled a further $84.4m in future savings.

A written parliamentary question from Labour Public Service spokeswoman Ayesha Verrall, answered by Social Development and Employment Minister Louise Upston at Budget Day, confirms plans for redundancy compensation.

Upston said, as at the end of May, 218 people were accepted for voluntary redundancy and were “in the process of finishing” their jobs.

The minister confirmed the total cost of voluntary redundancy compensation was $14,853,921.

The figure was confirmed at the release of the Government’s Budget, before confirmation of a further reduction of 86 jobs. The loss of 86 roles was smaller than the original consultation process, which proposed cutting a net 97 positions.

When the cuts were confirmed, Ministry of Social Development deputy chief executive for people and capability Nadine Kilmister said MSD was reducing the size of its workforce to “meet its fiscal sustainability commitments and ensure it is managing within its funding baseline”.

Kilmister said there had been a number of changes “as a result of feedback”. Those impacted by the changes were able to speak with their managers; senior leaders also went over feedback and met with the Public Service Association on the job cuts.

The Herald has previously confirmed the Ministry of Business, Innovation, and Employment would fork out $8,075,996.85 in redundancy costs. The New Zealand Customs Service has estimated its redundancy cost to be around $2.9m, and the Ministry for the Environment is expected to pay more than $1.5m in payouts.

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.