The New Zealand government is facing significant losses as a result of public service cuts, with over 2,000 people losing their jobs in the public sector. The Ministry of Business, Innovation and Employment (MBIE) alone has cost the government $6 million in redundancy payouts. These cuts are part of a broader reduction in numbers ordered by the tri-coalition government of the National Party, NZ First, and ACT.
MBIE, one of the largest government departments in New Zealand, has already cut 286 jobs, with more expected to follow. So far, the ministry has paid around $6.3 million in redundancy to 138 employees. Across 19 departments, nearly 2,000 jobs have been lost or will soon be lost. While the final cost is unknown, Finance Minister Nicola Willis has not requested an estimate.
The cost of redundancies is expected to be met from the departments’ and agencies’ existing funding. MBIE is the only ministry that has provided figures for redundancies, while others have stated that staff are still being consulted and therefore the estimated cost is not yet known.
According to information supplied to Parliament’s Select Committees, the average payment for a public servant’s redundancy is estimated to be around $50,000. The exact amount varies depending on salary and employment agreement terms. Senior employees are likely to receive more significant payouts compared to junior staff.
The Public Service Commission has confirmed a significant increase in the number of people employed in senior leadership roles across the public service. Between 2016 and 2023, the number of tier-two managers increased by 41 percent, with an average salary of $309,900. Similarly, the number of tier-three managers increased by 42 percent, with an average salary of $215,700.
Despite this growth in senior roles, Finance Minister Nicola Willis has made it clear that senior managers are not exempt from the cuts. She emphasized the need for efficient and accountable management structures to deliver results for New Zealanders. Following her first Budget in May, Ms. Willis plans to review the total number of tier-two and three roles relative to the overall size of the public service workforce and consider any necessary changes.
The government’s decision to implement public service cuts has been met with mixed reactions. While some argue that reducing the size of the public sector is necessary for fiscal responsibility, others express concerns about the impact on individuals losing their jobs and the overall effectiveness of government departments.
The ongoing cuts will undoubtedly reshape the New Zealand public service landscape, with significant financial implications for the government. As the process continues, it remains to be seen how these changes will ultimately affect the delivery of services to the people of New Zealand.
