14 Feb 2024

Pay cuts not on table in review of public service spending - Willis

12:32 pm on 14 February 2024
Nicola Willis

Some public agencies have vague goals that are "flowery", Nicola Willis says. Photo: RNZ / Samuel Rillstone

Finance Minister Nicola Willis has confirmed she does not intend to reduce public servants' pay through cuts to the sector.

Public service bosses have been asked to propose between 6.5 percent and 7.5 percent of savings, as the coalition government looks to slash annual sector spending by $1.5 billion.

Speaking at Parliament's Governance Select Committee, Willis told MPs that ministers and agencies had been asked to "apply good judgement" when working on the savings proposals.

"Ultimately, ministers will assess those proposals to decide whether to take them forward," she said.

"We've asked agencies to make clear when they're putting forward proposals what impact they could have on the provision of frontline services so that ministers can be very clear about the potential consequences of any decisions taken."

Labour's Grant Robertson told Willis there were thousands of public servants who were "very concerned" about the reach of the public service cuts.

He asked Willis to confirm if the pay of public servants was "on the table", as ministers considered cuts to the sector.

Willis replied, "I can confirm for the member that we are not intending to reduce pay."

Some public agencies, Willis said, had "quite amorphous goals that are flowery" and Prime Minister Christopher Luxon was working on establishing new targets for the public sector.

"Our view is that where agencies have quite amorphous goals that are flowery, it's very easy to have indicators of progress. It could just be how many reports you've published or how much activity you have engaged in.

"What we're interested in is achievement and we think that objective measures are needed to indicate achievement, and that we actually have to measure and track progress towards those objectives."

Public Service Commissioner Peter Hughes later told MPs, measuring performance in the public sector "was not easy".

"In the private sector, that's external to you; profit loss, return [to] shareholder...you might be in a different line of business but that's external to you.

"Each of these agencies is bespoke, and it does an activity that nobody else in New Zealand does. So you have to measure the performance, you know, in a bespoke way each time.

"If you look at an area like family violence, what success? Is it more notifications of family violence?...What does success look like?

"It's really challenging to get right to the nub of the performance. However, we can get sharper at that and do better."