26 Jan 2024

Government accused of quietly expanding remit of public service cuts

7:06 am on 26 January 2024
National Party deputy leader Nicola Willis and National Party Christopher Luxon after the Budget 2023 announcement.

Finance Minister Nicola Willis, on the other hand, says the policy is consistent with National's pre-election commitment to restore discipline to government spending. Photo: RNZ / Samuel Rillstone

The government is being accused of quietly expanding the reach of its public service cuts to pay for promised tax breaks.

It comes as one of the largest public agencies, the Ministry of Business, Innovation and Employment, puts the call out to staff, offering voluntary redundancies.

National campaigned on slashing spending across 24 public agencies, as part of its "Back Pocket Boost" tax plan.

The policy proposed an annual reduction in back-office expenditure by an average of 6.5 percent; on top of Labour's $500 million in annual public sector savings.

National identified two dozen agencies which could spend less including the transport, conservation and justice ministries.

Now, Finance Minister Nicola Willis' office has confirmed she asked "all departments" to identify savings in December, not just those listed in National's election policy.

"Departments have been asked to identify savings options of either 6.5 or 7.5 percent depending on how much their full-time equivalent staff numbers (FTE) have increased since 2017," it said in a statement.

Labour public services spokesperson Ayesha Verrall said National had expanded the public service cuts it campaigned on.

Minister of Health Ayesha Verrall

Labour public services spokesperson Ayesha Verrall. Photo: RNZ / Samuel Rillstone

"Nicola Willis made reckless commitments about tax cuts which she couldn't afford and now she's sneaking in larger cuts than she signalled before the election. This is a broken election promise."

Willis said the policy was consistent with National's pre-election commitment to restore discipline to government spending.

"We were very upfront about our commitment to get a reduction in consulting and contracting spend across government; to move resources out of bureaucracy and into the frontline.

"An inclusion of those [all] agencies in this exercise is entirely consistent with those promises we made to New Zealanders."

National has promised frontline services will not be impacted by the cuts, but Public Service Association national secretary Duane Leo said this was not possible.

"6.5 or 7.5 percent is going beyond the removal of contractors and efficiencies; it's basically going to cut to the bone in terms of services and staff."

Public sector bosses will present their savings plans - including potential risks - to the government soon, before ministers and Cabinet decide whether or not to accept their proposals.

Willis is looking to slash annual public service spending annually by $1.5 billion.

The bulk of that will come from a reduction in consultant costs and savings already announced by the previous government.

The remaining $600m will be made up of further cuts.

Exactly where these savings are made will be revealed in May's Budget.

Some government departments are already making changes.

The Ministry of Business, Innovation and Employment has confirmed it had offered its staff voluntary redundancy this month, having signalled the process late last year.

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