Nicola Willis seeks further savings from public sector as debt pile grows, no surplus in sight

Finance Minister Nicola Willis believes more savings can be found in the public sector as pressure grows on the Government to cut spending amid new economic forecasts.

It was revealed during yesterday’s Half-Year Economic and Fiscal Update (HYEFU) that a surplus is not in sight.

Instead, it showed the deficit deepening further, from $14 billion in the year to June 2025 to $16.9b in 2025/26, before narrowing to $60 million in 2029/30.

Willis told Newstalk ZB’s Heather du Plessis-Allan there was possibly more room for savings by cutting public sector roles.

“This is still room for efficiency in the public service,” she said.

“I have, together with ministers, identified other areas where we think, look, are we getting enough value for money for the taxpayer there?”

Finance Minister Nicola Willis during her HYEFU lockup presentation at the Treasury. Photo / Mark Mitchell

Willis told HeraldNOW’s Michael Morrah she had written to all her ministers in the Government and their agencies.

“I’ve suggested to them that they look for efficiencies in their own spending, that they ensure that their government agencies are putting forward ideas for savings.”

She said when they come back with what activities could be tightened, which things not having “good impact” could be stopped, that this would make up their Budget in May next year.

Willis was adamant Kiwis should not be discouraged by the forecast, promising “tens of thousands” more jobs would be created in the coming years and incomes would rise faster than inflation.

She also said to du Plessis-Allan that she would ask Winston Peters about possibly cutting final-year fees free for tertiary education.

Willis also said they would not be cutting the winter energy payment, as per the election promise.

“The Prime Minister sent out a commitment card prior to the election, and one of the commitments he made was not to reduce the winter energy payment for superannuitants.

“You’ll see a theme here, which is where we’ve made commitments to the New Zealand people, we think it’s important we keep them. And it’s relevant not just for these three years.”

Deputy Prime Minister David Seymour told Morrah the Government needed a different approach. He said we needed to go back to a “compact, small, efficient government that delivers the services people need”.

Yesterday the Government announced the formation of a new mega-ministry, merging the Ministry for the Environment, the Ministry of Housing and Urban Development, the Ministry of Transport, and local government functions from the Department of Internal Affairs to create the Ministry of Cities, Environment, Regions and Transport.

The ministers involved denied the move was intended to reduce headcount, saying a fixed number of job losses had not been decided.

Seymour this morning said more staff does not lead to better outcomes in the public sector.

“We inherited about 60,000 full-time equivalents in the public service. That was up from 47,000 when Labour first took office.

“There’s another 15,000 people in there doing a lot of things, but people ask themselves, has the quality of services improved? Actually, during those six years of opposition, a lot of public services got worse.

“For example, fewer people were vaccinated for measles, just to pick one really important example.

“What we need to do is make sure that we get the outcomes ... spending the money because if you just say, ‘Well, the solution to every problem is to spend more money’, we will be broke.”