Willis’ mini-Budget, revealed $7.47 billion in cuts; some of the forecast savings involved stop-work notices on the controversial Let’s Get Wellington Moving plan and fair pay agreements.
Efforts to cut back spending in the public sector had already started under the prior Labour-led Government. In August, then-Prime Minister Chris Hipkins and Finance Minister Grant Robertson announced a savings package across the sector in an attempt to turn the tide on spending.
The Labour pair backed $4 billion in savings over a four-year period, on top of savings announced during Budget 2023 - Grant Robertson’s final Budget. Agencies were given savings targets between 1% and 2% under Labour.
Months later, with National’s Willis at the helm, the savings targets were raised to 6.5% to 7.5% on average.
May’s Budget confirmed the savings target of $1.5 billion across the public sector has already been ticked off the to-do list.
Number crunching from the Herald reveals the latter target has culled thousands of jobs deemed “back-office” – racking up redundancy payouts above $58 million.
By the numbers
Of all of the agencies that’ve revealed their redundancy costs through publicly released written Parliamentary questions, the Ministry of Social Development racked up the highest spending.
Between November 27, 2023 and July 10, 2024, the Ministry’s gross cost of compensation for voluntary redundancies was $14,853,921. The agency’s voluntary redundancy process, which MSD underwent in April, saw 218 applications approved.
Four hundred people initially applied for voluntary redundancy, half of which were initially approved, though the figure eventually jumped to 218 after further review.
MSD’s savings target was the smaller of the options at 6.5% on average. Budget 2024 documents confirm the Ministry of Social Development cut $107 million. As of May 30, the agency had been signalling a further $84.4 million in future savings on the horizon.
The $14.8 million redundancy cost does not include the plans to reduce further roles. The change proposal was finalised on June 26, confirming a further reduction of 86 roles. Initially, 97 roles had been under review.
The final sign-off brought the total number of roles being axed at the social development agency to around 700.
MSD proposed further cuts in late May after confirming the voluntary redundancies. Proposals have since been finalised.
Between November 27, 2023 and June 30, 2024 mega-ministry MBIE’s total cost of staff redundancies sat at $10,147,142.08. The Ministry of Business, Innovation, and Employment’s redundancy spend topped $6 million as at April 2024. At the time, MBIE had axed 286 roles.
Finalising the latest cuts, deputy secretary of corporate services, finance and enablement, Richard Griffiths, confirmed MBIE had reduced its roles by 346.4 fulltime equivalent roles – 94.6 of which were deemed vacant. A total of 159.5 fulltime equivalent positions were axed due to voluntary redundancies, 87 were cut due to work programmes ending, and five people were transferred to the new Ministry for Regulation.
Health New Zealand and Statistics New Zealand both expected a $7 million spend in redundancy compensation each. Health New Zealand Te Whatu Ora’s total redundancy cost, between November 27, 2023 and July 10, 2024 totalled $7,037,547. Statistics Minister Andrew Bayly confirmed Statistics New Zealand’s total spend on staff redundancies was $7,005,478 for the same period.
Some of the payments do not include recently confirmed cuts, including New Zealand Trade and Enterprise. Meanwhile, the aforementioned Budget 2024 documents signal further savings on the horizon and an era of fiscal restraint - fewer “back-office” positions, and a reduced use of contractors and consultants - for years to come.
On the numbers, Finance and Public Service Minister Nicola Willis said the Government was committed to driving “more value” from taxpayers and “restoring discipline” to spending.
Willis added redundancy payments are being met from within agencies’ reduced budgets.
“This means that while there is an initial cost in paying former employees their redundancy entitlements, overall there is a significant saving to the taxpayer, with our recent savings exercise driving out $1.5b in annual cost from public agencies – $6b over the next four years. In this context, the redundancy figure referred to is less than 1% of the savings delivered,” Willis added.
Cost-savings work is not over for each agency with many continuing to chase millions in savings.
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.
