“It all adds up,” Finance Minister Nicola Willis said revealing exactly how $3.9 billion each year until 2028 has been cut out of the public service.
Details for 34 public agencies and departments show that five met their baseline savings targets, 17 did not, and 12 went over and above.
The baseline exercise has saved $1.5b each year, with an extra $1b saved on programmes not related to the baseline. Savings were also made through the mini-Budget delivered at the end of last year ($775 million a year) and the scrapping of the Climate Emergency Response Fund ($597m).
$2.6b of what was saved by agencies will be used to pay for the $3.7b a year tax package.
Last year’s mini-Budget confirmed $7.4b worth of savings as a result of the new coalition’s policy and legislative bonfire. At the time Willis described them as a “down-payment on tax reduction”.
Today, the rest of the bill was paid.
The biggest chunk of savings comes from the Ministry of Business, Innovation & Employment, unsurprisingly given its size. It had a 7.5 percent reduction target so had to find $234m each year. It achieved $231m in savings from its baseline and another $254m through extra savings and revenue-gathering measures each year ($1.9b in total).
The savings programme for the ministry was led by David Seymour in his associate finance role, with Willis offering praise for his “very successful” work.
Act had wanted the public service cuts to go beyond the Government’s baseline savings targets.
Some $86.4m was saved by cutting back “enablement services” within the ministry such as human resources and communications roles as well as finance and legal services, just over $17m was saved through a downsizing of data collection via the ministry’s data insights function, and $38m was saved from various energy programmes including the scaling down of the Community Renewable Energy Fund and by stopping work on the Energy Emissions Reporting Scheme.
Smaller-scale savings were found through the disestablishment of the Consumer Advocacy Council ($5m), the winding down of the Weathertight Homes Resolution Service ($3.4m) and the closure of the Government Centre for Dispute Resolution ($3.4m).
Overall 44 separate savings measures for MBIE were noted in the Budget, some of which covered off multiple programmes at one time (for example Science, Innovation and Technology which included the wrapping up of the in-year Research and Development Tax Incentive payment and the Kiwi Saas programme).
A total of 240 separate savings initiatives were outlined.
“Some of those savings are small, others are bigger, some reduce the amount of funding for an activity, others stop an activity altogether. It all adds up,” Willis said.
“Ministers and agencies have focused on lower-value programmes, programmes that didn’t align with the coalition Government’s priorities and non-essential back-office functions including contractor and consultant spend.”
The Ministry of Housing and Urban Development also delivered more savings than expected. It was asked to find $109m each year until 2028, but has found $391m as well as an extra $61.3m outside of baseline ($1.8b in total over four years).
Primarily that came through a reduction in funding for Kāinga Ora of just over $1b over the next four years.
It also includes $20m from contracted motels for emergency housing in Rotorua where there is a reduction in demand, $174.5m from the Emergency Housing Review and Homelessness Action Plan, and $40m from a scaling back of Māori housing supply and investments in Māori housing providers.
At the Ministry of Social Development, $62.6m is saved by reducing spending on contractors and consultants and $129m saved through changing how housing subsidies, when the homeowner has a boarder, are calculated.
In Education, $73.6m in savings were expected each year, however the ministry found $114m as well as an extra $275m each year outside of the baseline. This has mostly been done through a reduction in staff ($148m saved) “back-office efficiencies” ($92m) and $61.5m saved through a reduction in spend on contractors and consultants.
And in a show of fiscal discipline Treasury went over and above its savings target – achieving $16.2m each year from a target of $9.5m – this was in part achieved through “back-office efficiencies and a recalculation of its bad debt liabilities in the wake of the Business Finance Guarantee and North Island Weather Events schemes.
Though some agencies went over and above their targets, others did not.
The Ministry of Foreign Affairs and Trade had a target of almost $100m a year and it achieved $15m. Those savings will be reinvested in the renewal of New Zealand’s diplomatic post infrastructure in the Pacific.
The police had a target of $118m but achieved baseline savings of $13.8m. Willis said it was clear that reaching the target would involve potentially making changes that would undermine the frontline service provision so the Government was not prepared to go through with that.
The wider Justice Cluster, which includes the police, had a savings target of $315m but only achieved $174.7m. The majority of that came from Corrections, which reinvested all its savings into its frontline.
Agencies with explicit reinvestment of their savings into the “frontline” were identified to be Ministry of Defence, Defence Force, Education, Health and Oranga Tamariki.
Dark day for the public service – PSA
Public Service Association national secretary Duane Leo described the cuts as “the wrong choice”.
“This is a dark day for public services and the dedicated public service workers who do so much to support communities and businesses up and down the motu.
“The Government has made a choice that tax cuts for landlords and higher income earners are more of a priority than the quality public services which underpin a thriving economy and support the health and wellbeing of New Zealanders.
“This is the wrong choice. How can giving away $3 billion in tax cuts to landlords make sense when we need to be investing more in services to support our growing and ageing population, tackle climate change and meet our infrastructure challenges?”
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Ministry for Women
Ministry of Defence
New Zealand Customs Service
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Over
Ministry for the Environment
Ministry of Business, Innovation & Employment
Ministry of Education
Ministry of Health
Ministry of Housing and Urban Development
Ministry of Social Development
Ministry of Transport
New Zealand Security Intelligence Service
Public Service Commission
The Treasury
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New Zealand Defence Force
New Zealand Police
Office of the Clerk
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Te Arawhiti
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Crown Law Office
Department of Conservation
