19 Apr 2024

How the coolest capital is shrinking

From The Detail, 5:00 am on 19 April 2024

This is not the first time a government has targeted public servants for job cuts, but this time Wellington is really feeling it 

Finance Minister Nicola Willis has directed

Finance Minister Nicola Willis has directed ministries to cut their spending by upwards of 6.5 percent. Photo: RNZ / Angus Dreaver

The thousands of government "back-office" job cuts are causing widespread pain in the capital city. 

In today's episode of The Detail, we speak to three journalists and a think tank researcher, looking at the larger picture around the cuts and what effect it will have on Wellington, a city that's already bending under the weight of broken infrastructure, housing shortages and earthquake-proofing difficulties.

RNZ digital explainer editor Katie Kenny gives us the basic facts.

"The public sector refers to a broad range, literally thousands of organisations, that serve as instruments of the Crown," she says.

"It's separated into central government - the state - and the local government. Within central government you've got the public service - those core 39 departments, ministries that you would recognise. That workforce of nearly 66,000 full-time staff ... that's the workforce that was explicitly targeted by these government cuts." 

Job losses were promised to be back-office - broadly those who work in administration - rather than frontline.

So far that's seen roles cut from the Ministry of Education, Primary Industries, Oranga Tamariki and the Ministry of Health to name a few. 

But the cuts have crept into some government services people weren't expecting.

"What we're now seeing are cuts at Crown entities - WorkSafe and Callaghan Innovation and Crown research institute Niwa for example," Kenny says.

Tracy Watkins, the editor of The Post and the Sunday-Star-Times discusses the change over time. She was Stuff''s political editor for about a decade and worked in parliamentary press gallery for over 20 years.

"We've had a period of quite a bit of stability in the public service for about the last 10 - 15 years," she says.

"One thousand jobs in one day is staggering, it's particularly staggering in Wellington, I think, where everyone's reeling from a whole lot of bad news lately. It feels more monumental in scale. But if you go back through the 1980s and then the 1990s, the public service numbers have really ebbed and flowed."

She talks about the 80s reforms under David Lange's Labour government, which cut public service jobs from around 70,000 down to around 30,000.

"There were huge swathes through the public service and the wider state sector. I think the difference is that was a national story... a lot of jobs were going particularly in regional New Zealand... here it feels very concentrated in Wellington." 

The John Key/Bill English National government had a cap of nearly 40,000 public servants. But Labour ditched this in 2018, growing the public service to around 65,000 during its time in office.

"They were addressing an imbalance under the Key government where things got too run down and the numbers had been stripped back too far," Watkins says.

"The other argument they used was because of Covid, there was just a whole lot of other extra work to do.

"If you delve into that too much you'd probably find that part of that was just simply keeping jobs open, purely from an economic point of view. But I think most people would accept that sure, Covid required some extra resource but probably not the 15 percent increase in staffing levels under Covid."

Roger Partridge from business funded think tank The New Zealand Initiative also talks to The Detail about the increase in public servants.

"You could speculate that more spending means more output and that will improve the lives of New Zealanders, if you take a very benign view - spend more on officialdom and you'll get better outcomes," he says.

"But perversely over the last six years, most New Zealanders would probably feel we've moved backwards on some of the core measures."

The Spinoff's Wellington editor Joel MacManus talks about the effect of the cuts on the capital.
"It is still true that the public service is the largest employment sector [in Wellington] by far," he says.

"But you've seen a lot of growth in tech, a lot of growth in science and research and that's really what the city needs so it doesn't have these big shocks whenever there's a change of government.

"There are 28,000 public servants working in Wellington. That's very significant but there's also the flow-on effects, we have all of these knowledge-based firms - that's what the Wellington economy's built on - these are consulting firms, the lawyers, the accountants... most of them are peripherally connected to the government."

And while only 45 percent of public servants are based in the capital, it's still the largest concentration of them.

"These cuts are focused more on back office, as Nicola Willis says, and those are more likely to be in Wellington. We're also seeing the bigger cuts happening at smaller agencies, which are more concentrated in Wellington too.

"To survive these up and downs, Wellington needs to be better at identifying what the other industries that can grow are. Tech has been really good for Wellington - we've had TradeMe, Xero, Sharesies, Hnry, Fintech especially has been really strong and that is again partly because it's leaning in to what Wellington already does well - which is administration, things like accountancy - we're the people that tick all the boxes and make sure the country's doing what it needs to do." 

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