23 Mar 2012

MFAT cost cutting likely to be half original target

5:43 am on 23 March 2012

Further details have emerged about cost cutting measures at the Ministry of Foreign Affairs and Trade.

The ministry wanted to save $24 million under pressure from the Government, but its plans have been watered down amid criticism from its minister, Murray McCully.


It is now likely to halve its earlier proposed job losses and remove most of its planned outsourcing of work.

A letter from Mr McCully gives a new savings figure of $12 million from changes in European operations.

This would include the closure of the diplomatic missions in Stockholm and Warsaw and downsizing or closure in Madrid, Rome and The Hague.

A further $6 million could be saved from the budget for support staff, but the minister stresses changes here should be done very carefully.

The letter also reveals Mr McCully was unhappy with the idea of existing staff having to apply for new positions in the ministry.

But he said he was convinced by ministerial managers that the goal of appointment on merit could only be achieved by adopting this system.

No assurances given to union - PSA

The Public Service Association says it got no assurances after a meeting on Thursday with managers at the Ministry of Foreign Affairs and Trade.

The meeting considered the plan to save $24 million. Minister Murray McCully has indicated he is dissatisfied with some aspects of that plan.

PSA national secretary Brenda Pilott says at the meeting she was told only that no decisions had been made on any of those aspects.

She says that is at variance with comments by Mr McCully in Parliament suggesting decisions have been made on matters such as outsourcing.

Ms Pilott adds that she got no assurances on job cuts, despite repeated suggestions that cuts would be scaled back considerably.

Mr McCully on Wednesday told Radio New Zealand's Checkpoint programme that the original proposals to make cutbacks in embassies in China, India and South East Asia sent the wrong signal in those growth markets.

He said he had confidence in Mr Allen. "This has been a genuine attempt at modernising a ministry that needs change," Mr McCully said.

"He needs to listen, though, to the comments that come from the staff around the world - and the Government's trying to work with him and his management team to make sure that we can focus on the areas of change where we're going to make gains for New Zealand."

Labour's spokesperson on Foreign Affairs and Trade, Phil Goff, says Mr McCully should front up and admit he made a mistake over the planned reforms .

He told Morning Report that the minister would on Thursday release a letter blaming the proposed cuts Mr Allen, which he said is a gutless move, given everyone knows Mr McCully had full input into the decisions.