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Lambton Quay, Wellington. (Photo: Getty Images)

The Bulletinabout 11 hours ago

Wellington prepares for another public sector shock

Contributing writer
A busy city street with tall buildings, shops, cars, and people crossing the road on a cloudy day. A red and green flowerbed lines the center. An orange banner on the left reads "THE BULLETIN.
Lambton Quay, Wellington. (Photo: Getty Images)
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The government is planning to shrink the public service to its smallest level in nearly a decade – and the capital is bracing for impact, writes Catherine McGregor in today’s excerpt from The Bulletin.

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A loss of 9000 jobs to save $2.4 billion

“Precisely right”, said the NZ Initiative’s Oliver Hartwich of yesterday’s announcement of further ministerial mergers and cuts to the public service. He was one of its few fans. As RNZ reports, the Public Service Association’s Duane Leo called the plan “chaos dressed as strategy” and “an act of wilful destruction”, saying the government’s AI plans were fanciful: “You can’t automate a social worker visiting a vulnerable child. You cannot replace a biosecurity officer inspecting cargo at the border with a chatbot.” Labour leader Chris Hipkins said while he had “no problem” with a more integrated public service, the cuts would inevitably lead to worse frontline services.

The plan sets a target of 55,000 public service full-time equivalents by July 2029 – down from the current 63,600, and a return to the historical norm of about 1% of the population. The cuts will save around $2.4 billion, to be redirected to health, education, infrastructure and defence. Prime minister Christopher Luxon acknowledged the human cost: “Yes, there will be job losses over time”, he said, but the public service was “not a make-work function”.

A report from the National Hockey Centre

To The Spinoff’s Joel MacManus, who was in the room for the speech, two things stood out beyond the headline numbers. The first was the speech’s emphatic push for AI, and the second was how “openly combative” it was – toward both Labour and NZ First. Willis repeatedly framed her points in contrast with Labour and drew laughs from the Business North Harbour audience when she quipped “I’m not the one nationalising the BNZ”. Another subtle dig at Winston Peters came at the media standup, when a reporter asked whether she’d informed Peters that MFAT, the ministry he oversees, would also be facing cuts. And a follow-up: was it a tough conversation? “Yes,” Willis replied.

But Peters may not have been quite as irked as he appeared. He suggested last night that future cuts to MFAT could be cancelled after the election, RNZ reports. “The Budget doesn’t stretch four years, he told reporters. “If you believe that with an election coming, you know nothing about democracy.”

Wellington’s ongoing pain 

Wellington – which is home to 42.6% of public servants, by far the largest regional concentration – is bracing for impact, again. Mayor Andrew Little acknowledged that job losses would “naturally cause anxiety to a lot of people” in the city, adding he had been given no advance warning and would seek a meeting with Willis.

Speaking to RNZ’s Susan Edmunds, Infometrics’ Brad Olsen said Wellington had long been structurally dependent on a public sector that had grown unsustainably, comparing the coming adjustment to the decline of single-industry towns. “Think of some of the biggest places that might have had large timber mills in them,” Olsen said. “Wellington will change, just like many other economies around New Zealand have adjusted over time.”

The MCERT test case

On agency mergers, Willis pointed to New Zealand’s 39 ministries and departments – against 16 in Australia, 24 in the UK and around 12 in Finland – and promised to “significantly reduce” that number over the next three to five years. The template is already under way: the third reading of the bill to fold the Ministry for the Environment into the new MCERT mega-ministry (Cities, Environment, Regions and Transport) is due today.

Writing in The Post (paywalled), Rob Stock says the MCERT arrangement is unique among OECD countries, where environment portfolios typically stand alone or sit alongside closely related areas such as agriculture or energy. While staff at every affected ministry are watching developments anxiously, it’s the fate of the Ministry for the Environment that is causing the most anger among opposition MPs. Or, as the Greens’ Lan Pham put it: “40 years of a dedicated voice for the environment disestablished after 40 minutes of select committee.”

Related from The Spinoff:​