New Zealand's government plans to cut 14% of public sector jobs, laying off nearly 9,000 workers by mid-2029 as part of a bid to slash billions in spending, Finance Minister Nicola Willis announced Tuesday.
Details of the Cuts
Willis told a business audience in Auckland that the cutbacks would save 2.4 billion New Zealand dollars ($1.4 billion) over the period. The number of public servants would be reduced to 55,000, a drop of 8,700 from December 2025 figures. This would bring the ratio of public servants to 1% of New Zealand's population of 5.3 million, down from 1.2%.
“That’s unsustainable, it’s unaffordable and it’s out of step with international trends,” Willis said Tuesday.
Exemptions and Further Measures
The military, teachers and doctors would be exempt from the job losses. The measures also include three consecutive years of budget cuts for most public agencies, a reduction in the number of departments from 39 to an unspecified figure, and faster adoption of AI technology across the sector.
Political Reactions
Unions and opposition parties decried the announcement. Labour Party leader Chris Hipkins said, “There is no way you can reduce that many people working for our public service without reducing front-line services.” Duane Leo, a union spokesperson, called the measures “an act of willful destruction.”
Background
The center-right government, in power since 2023 and facing a November election, blames fiscal recklessness by the previous Labour government for growing public servant numbers, which rose from 48,000 to 63,000 under Labour. In 2018, Labour revoked a cap on public sector jobs imposed by the previous National government, arguing it had led to ballooning spending on contractors.
Most agencies will have their funding trimmed by 2% in the May budget, with cuts of 5% per year for the next two years if the government is reelected.
Economic Context
The cuts come as New Zealand's economy remains sluggish. Prime Minister Christopher Luxon, who campaigned on fiscal management, said the prospect of a more efficient public sector was “exciting” and added, “The public service is not a make-work function.”
