Radio New Zealand staff are expected to agree this week to a freeze on salaries as the public broadcaster identifies $1.5 million of savings to make ends meet.

Radio NZ is facing another round of cost cuts after the Government ignored warnings of chronic underfunding and staff shortages.

Cutbacks are common in the media sector, which has been ravaged by an advertising slump. Commercial radio stations have also been laying off staff, and Television New Zealand has cut staff and programming.

Radio NZ does not rely on advertising and all government departments face cuts.

But it has been severely underfunded in good times, and is in a poor position to make cuts now.

Because public radio is wholly reliant on taxpayers and funding was frozen in the last Budget, it would battle to sustain services, an industry source said.

The Government froze funding despite an independent "baseline funding review" from accountancy firm KPMG, which showed Radio NZ was underfunded and understaffed, and underpaid its employees.

The review - commissioned by the Ministry for Culture and Heritage and which the Herald obtained under the Official Information Act - was initially withheld by the Government.

Published in November 2007, the KPMG review said Radio NZ - which broadcasts Radio NZ National and Radio NZ - needed $7 million to $7.6 million to meet commitments in 2008-2009 and was short of 25 employees. The shortfall would grow to $8.6 million to $9.5 million and 40 staff by 2010-2011.

The Labour Government last year increased Radio NZ's funding by $2.4 million. But an insider said that money had been taken up by inflation and Radio NZ faced essentially the same problems to sustain services as in 2007.

KPMG - which found $4 million of the shortfall was to hire more employees and pay better money - concluded that Radio NZ was running efficiently and there were no provisions to redeploy resources.

Radio NZ declined to discuss the warnings in the review, though chairwoman Christine Grice issued a statement.

"The deferment of funding recommendations identified in the recent independent baseline funding review will put pressure on our core operations and services and will delay the implementation of critical infrastructure," she said.

"Despite its current financial pressures, Radio New Zealand will strive to maintain the highest international standards of public service broadcasting," Ms Grice said.

Broadcasting Minister Jonathan Coleman declined to comment.