Act’s David Seymour finds $115m in public sector savings in Budget 2025 that freed up $5.3b overall

Act leader David Seymour’s recent public sector savings drive freed up $115 million annually in Budget 2025, which showed ministers collectively saved $5.3 billion.

But the Associate Finance Minister says his savings are “quite a lot of money” and pointed to the significant pot of money reaped through his colleague Brooke van Velden’s pay equity reforms as an example of the “massive savings” Act had contributed to the Budget.

“The coalition certainly hasn’t saved as much as Act would save ... however, I know from all the discussions, the taxpayer would be paying more without Act in the coalition,” Seymour told the Herald in an interview on Monday.

The $5.3b figure consists primarily of $2.7b in average annual savings resulting from the pay equity changes, but also includes savings found across more than 100 other initiatives (about $2.1b) and around $600m from revenue-raising. Over the forecast period, the Government is saving $21.4b.

In his Budget day speech, Seymour said he was proud of the role Act had played alongside its coalition partners in “questioning spending, finding the savings, and collectively, together, saving billions of dollars”.

He ran his own public service savings drive in the lead-up to the Budget to find money across the ministries, which Finance Minister Nicola Willis told the Herald resulted in $115m in average annual savings.

“All Cabinet ministers were asked to identify savings across Government,” Willis said.

“Through our collective efforts, $5.3 billion operating per annum in savings was identified to support the delivery of Budget 2025. As has been previously reported, minister Seymour ran a specific public sector savings exercise. This delivered $115 million of average annual savings.”

The Budget showed $5.3 billion in savings annually. Photo / Mark Mitchell

Speaking to the Herald, Seymour reiterated that Act has contributed “massive savings” to the Budget and the Government was now “doing what so many people in New Zealand have had to do for the last five years”.

“If it wants to buy something new, it has to save elsewhere. I think what Brooke’s done [with the pay equity changes] is obvious, but also my savings exercise, well it may have only saved 100-and-something million dollars, that’s quite a lot of money.”

He said this mostly came through savings in welfare and praised Social Development Minister Louise Upston for being keen to make changes.

More money could be found, Seymour said, but he believed he “held up the mirror” to his ministerial colleagues and “showed them where in their portfolios savings could have been made”.

“Having been part of every Budget meeting and got to the outcome we did, I think it’s a good few months’ work by all of us.”

In Budget 2025, there were 116 savings initiatives identified across various votes (essentially different areas of Government). Some of these votes saved significantly more than others.

For example, one of the biggest areas of savings was in social development. It had nearly $2b in operating savings over the forecast period, which included more than $1b saved through changes to emergency housing costs. The overall saving was offset by nearly $500m of new spending over the period.

Another area where there was a high degree of reprioritisation was education. It had more than $1.7b in new spending supported by $600m in savings, giving it an operating total of $1.119b.

What Act wants

The Government is still “spending dramatically more than pre-Covid”, Seymour said.

In numerical terms, the Government’s core Crown expenses jumped from $87b in 2019, prior to the pandemic, which led to significant increases in spending, rising to $139b last year. When considered as a percentage of New Zealand’s Gross Domestic Product (GDP), those expenses rose from 28% in 2019 to 33% in 2024.

Seymour said it would be difficult to get expenses back to the pre-pandemic figures, partly due to higher interest costs, but it was possible to return to about 30% of GDP. Under Treasury’s forecasts, it will reduce to 30.9% in 2029, the end of the current forecast.

Asked what Act would do if it had more influence over the Government, Seymour said there were three areas the party would be interested in looking at.

That includes improving government efficiency (Seymour has mooted cutting the number of ministerial portfolios and departments), addressing entitlements like New Zealand Superannuation (he’s in favour of slowly increasing the age) and evaluating what the Government owns (the Act leader’s suggested some degree of privatisation in recent months).

“That’s where if Act was alone in Government, we would take a significantly more aggressive approach. But within the coalition, I think we can be proud on the impact we’ve had.”

Act leader David Seymour said his $115m in savings was still "quite a lot of money". Photo / Mark Mitchell

In his Budget speech, Seymour said the Budget reduced “the share of the nation’s economic pie that is taken by Government”.

Looking at core tax revenue, the Budget shows $86.5b was raised in 2019 (27.8% of GDP) before reaching $120.6b in 2024 (28.7%). It’s currently forecast to decrease slightly in the next two years in terms of a percentage of GDP, before then rising again and hitting 28.3% in 2029.

Asked what he would do to bring that down, Seymour stressed he wouldn’t lower tax until the Government stopped borrowing.

“Borrowing to cut taxes is unfair on future generations. Once we’ve got spending until control and we’ve stopped borrowing, then you can start talking about tax,” he said.

According to the Operating Balance before Gains and Losses (Obegal) measure the Government uses (Obegalx, which discounts ACC expenses), New Zealand will return to a surplus in 2029.

Seymour continued his advocacy for flattening the tax system. At the 2023 election, Act proposed three rates by 2026/27, with the top rate being 33%.

“Frankly, we’ve got to decide, do we want our tax code to be a reflection of tall poppy culture, where a small number of people get whacked for most of the cost of government?” Seymour told the Herald.

“Or do we want to have a much more even tax rate where you pay the same tax rate, and if you earn more, you pay more, but you don’t get almost four times the rate of tax on your last dollar as you do on your first, which is what people currently face.”

Jamie Ensor is a political reporter in the NZ Herald Press Gallery team based at Parliament. He was previously a TV reporter and digital producer in the Newshub Press Gallery office. In 2025, he was a finalist for Political Journalist of the Year at the Voyager Media Awards.