New Zealand’s government is to lay off nearly 9,000 workers, amounting to 14 percent of public sector jobs, by mid-2029 as part of a bid to slash billions in spending, Minister of Finance Nicola Willis said yesterday.
Willis said her administration would also enact three consecutive years of budget cuts for most public agencies, “significantly reduce” the number of departments and demand faster uptake of artificial intelligence (AI) technology across the sector.
The cutbacks would save NZ$2.4 billion (US$1.4 billion) during that period, she told a business audience in New Zealand’s biggest city, Auckland.
Photo: Reuters
Many public servants live and work in the capital, Wellington. Their numbers would be cut to 55,000, a drop of 8,700 from December last year, Willis said.
That would reduce the number of public servants to 1 percent of New Zealand’s population of 5.3 million people, she added, down from 1.2 percent.
“That’s unsustainable, it’s unaffordable and it’s out of step with international trends,” she said.
The military, teachers and doctors would be among those exempt from the job losses, Willis said.
The measures would also reduce the number of government departments and agencies from 39 to an unspecified figure.
However, the layoffs would not happen right away, and Willis did not detail a plan for deciding who would lose their jobs.
The center-right government, which has been in power since 2023 and campaigned then on downsizing the public sector, faces a fresh election in November.
Unions and opposition political parties decried the announcement.
“There is no way you can reduce that many people working for our public service without reducing front-line services,” said Labour Party and opposition leader Chris Hipkins.
Duane Leo, spokesperson for the union representing thousands of public servants, said the measures were “an act of willful destruction.”
The government, led by the National Party, blames what it says was fiscal recklessness by the previous center-left administration led by Labour for growing public servant numbers, which increased from 48,000 to 63,000 during Labour’s time in office.
In 2018, Labour revoked a cap on public sector jobs imposed by the last National government, saying that had prompted ballooning spending on contractors and consultants by agencies avoiding new full-time hires.
Most government agencies would have their funding trimmed by 2 percent in the government’s budget at the end of this month, Willis said.
Cuts of 5 percent per year would follow for each of the next two years if the government was re-elected.
The public sector “hasn’t been keeping pace” with advances in AI and digital technology, and would be required to adopt them, Willis said.
The pledge of public sector cutbacks comes as growth in New Zealand’s economy remains sluggish and Prime Minister Christopher Luxon, who sold himself as a better fiscal manager than his opponents, seeks to show evidence of economic recovery before November’s vote.
Luxon said that the prospect of a more efficient public sector was “exciting.”
“The public service is not a make-work function,” he said.
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