New Zealand’s Finance Minister Nicola Willis announced Tuesday that the government will eliminate approximately 9,000 public sector positions by mid-2029, representing 14% of all government jobs, as part of an effort to reduce spending by billions of dollars.
Speaking to a business gathering in Auckland, the country’s largest city, Willis outlined plans that include three straight years of budget reductions for most government agencies, a substantial decrease in the number of departments, and accelerated implementation of artificial intelligence technology throughout the public sector. These changes are projected to save 2.4 billion New Zealand dollars ($1.4 billion) over the specified timeframe.
The workforce reductions will primarily affect Wellington, the capital city where most government employees are based. Public servant numbers would drop to 55,000, down 8,700 positions from December 2025 levels, according to Willis.
This reduction would bring public servants to 1% of New Zealand’s 5.3 million residents, compared to the current 1.2%.
“That’s unsustainable, it’s unaffordable and it’s out of step with international trends,” Willis stated during her Tuesday address. Military personnel, educators, and medical professionals would be protected from the job eliminations, she noted.
The reforms would also consolidate the current 39 government departments and agencies into a smaller, unspecified number.
The job cuts won’t begin immediately, and Willis provided no specifics about how decisions would be made regarding which positions to eliminate. Her center-right administration, in office since 2023 after campaigning on reducing government size, must face voters again in November.
Labor organizations and opposition politicians strongly criticized Tuesday’s announcement.
“There is no way you can reduce that many people working for our public service without reducing front-line services,” said Labour Party and opposition leader Chris Hipkins. Duane Leo, spokesperson for the union representing thousands of public servants, said the measures were “an act of willful destruction.”
The National Party-led government attributes what it characterizes as financial irresponsibility by the previous center-left Labour administration for expanding public servant employment from 48,000 to 63,000 during Labour’s tenure. In 2018, Labour had eliminated a public sector hiring cap established by the previous National government, arguing that restriction had led to increased spending on contractors and consultants as agencies avoided hiring permanent staff.
Most government departments will see their funding reduced by 2% in the budget scheduled for late May, Willis explained. Additional 5% annual cuts would follow for the subsequent two years if the government wins reelection.
The public sector “hasn’t been keeping pace” with developments in AI and digital technology and must adopt these innovations, Willis emphasized.
These public sector reduction promises come as New Zealand’s economic growth remains weak and Prime Minister Christopher Luxon, who positioned himself as a superior fiscal steward compared to his political rivals, attempts to demonstrate economic improvement before November’s election. Luxon described Tuesday the possibility of a more streamlined public sector as “exciting.”
“The public service is not a make-work function,” he stated.
