Election 2023: Chris Hipkins faces questions over sweeping public service cuts

Prime Minister Chris Hipkins is facing questions after announcing huge, last-minute cuts to the public sector.

Hipkins announced on Monday that $4b would be trimmed from the public service over the next four years. Each government agency would need to reduce 1%-2% of its spending.

National Party deputy leader Nicola Willis said Robertson’s plan to cut spending was “simply not credible”.

“After six years of spending New Zealanders’ money with reckless abandon he’s now finally admitted he has a problem, six weeks out from an election – this is far too little, far too late,” she said.

The ACT Party said the cuts did not go far enough, while the Green Party said the cuts would constrain future governments and reflected a need to raise revenue through higher taxes on the well-off.

On Tuesday, Hipkins stood by the Government’s plan to cut spending.

The savings weren’t coming from frontline services and would not undermine the public services on which New Zealanders rely, though consultants could be affected, he told TVNZ.

He also refused to speculate how many public sector workers could be in danger of losing their jobs.

“I think it will be relatively minimal, because the public sector currently carries a number of vacancies [that could be closed],” he told RNZ.

“We’ve set a savings target … that the public sector bosses need to find – how they do that, they’ll go through a process.”

Finance Minister Grant Robertson outlined the savings in a statement. The largest amount was coming from MBIE, which had trimmed $110.8 million from next year, a 2% reduction in its baseline spending. Education was next, with $69.7m saved, also 2%.

Some agencies would be off limits for cuts, including Superannuation, benefits and KiwiSaver; loans, finance costs, tax receivables; frontline health and education spending; NZDF, Police, NZSIS and GCSB, Whaikaka the Ministry of Disabled People, and the Offices of Parliament.

Further savings would come from a clamp-down on consultants and contractors, bringing spending back to pre-Covid levels.

Robertson said the public sector, after moving on from the pandemic response, would be able to reduce contractor and consultant spending to below 11% of Public Service workforce spending – from a high of 14.6% in 2021/22.

He said the savings were needed in the face of “a deteriorating global economy”, with tax revenue falling more than $2b short of Treasury’s forecasts.