On the streets of Wellington, people say the prospect of AI replacing public servants is ‘depressing’

Tuesday, 19 May 2026

Wellington cafes and pubs are nervous that more redundancies in the public service will see fewer customers.

Businesses are already struggling with the lower demand driven by the fuel crisis.

Wellington residents were downbeat on the news as well, with just under half of the public service based in the capital.

The property market could also suffer, with job instability affecting sentiment.

With just under half of the public sector based in Wellington, Laura Frykberg gauged the mood in the capital on news that yet again public sector jobs are on the chopping block in a bid to save the Government money.

The start of 2026 was finally looking up for Thunderbird café, with manager Mayuresh Mhaske describing business in the late summer months as “consistent”.

The up-tick was a noticeable and positive shift for the Wellington café, after a “dire” year last year and another dip the year before that.

But it was short lived, with the Iran war pushing up fuel prices just months later and customer numbers declining once again.

A combination of working from home to save on petrol and people worrying about their discretionary spend had seen foot traffic drop and he was back to square one.

Now, with news that thousands of public service jobs are set to be axed, the manager of three years feared business could get even worse.

“Public servants are among my regular customers. If people have money in their pocket they come to our café and spend, if they lose their job they will not,” Mhaske told Stuff.

There were similar fears at neighbouring Wellington eatery, Gemini Cafe, with owner Kelly Wang saying the business had been “expecting better” this year.

“We had the fuel crisis and now we have this. We worry about what more people out of work will do to us,” she said.

Wang had owned the cafe since 2019 and said the capital had not “bounced back” after the Covid-19 pandemic.

“We used to have people getting a coffee to start their day, but now customers are cutting it down to every second day or third day,” she said.

“Or they just work from home because fuel costs so much. So having more people in the capital out of work will just add to all that stress.”

Across the road at The Featherston tavern, general manager Alistair “Geordie” Craib said removing more people from the workforce would do little to help business.

“Ever since the pandemic, working from home, and the Government cuts [in 2024], the city centre is really quiet,” Craib told Stuff.

People were “nervous about holding on to their jobs” this year given the high price of fuel, and having a meal out was “the first thing to go” from their expenditure.

“It’s a perfect storm of problems we have had in Wellington. The start of the year began well, but with fuel prices up and people working from home, we suffer for that,” he said.

On the streets there was pessimism too, with retired Victoria University professor David Pearson describing public servants as adding to the city’s “vibrancy”.

“I think it is depressing news. The number of public servants make a huge difference to how small businesses can operate and survive,” Pearson told Stuff.

“If you make more public servants redundant, all that will happen is you will then have to increase the number of people doing private contracting,” he said.

“Doing that is often more expensive than the salaries of the public servants they have just fired.”

Wellington business analyst Aya Kovesy said it was going to be “tough” on Wellington, with many cafés and shops closing recently.

“If you put more people out of work, they are going to look at their own cost of living and have less discretionary money,” she said.

When asked about news that, as part of the cuts, the Government was increasing the use of AI to “deliver significant savings”, she was sceptical.

“It doesn’t get it right all the time and who is going to be checking to see it does the work properly? It isn’t a replacement for people,” she said.

Another woman, who did not want to be named, said since moving to Wellington she had seen “so much change” and was saddened by the job cuts.

“It brings me to tears what the city’s going through. I keep hoping something will change to make it go back to what it was, the city I fell in love with when I came here,” she said.

The property market would also take a hit, according to Craig Lowe, the managing director of Wellington real estate agency Lowe and Co.

“It’s not good news. The government sector, being a big employer in Wellington, is a really, really important factor for sentiment and for demand,” Lowe said.

Wavering job security made people less inclined to buy or sell, which could hurt Wellington’s property market, already “one of the worst” in the country.

The fuel crisis also meant people were less inclined to take risks in property, which had affected sentiment.

“I would imagine people are less inclined to renovate or spend money. There is certainly a lot less building going on and less development,” he said.

The decision to cut thousands of jobs, announced by Finance Minister Nicola Willis, would see the core public service trimmed back to 1% of the population from its current 1.2%.

The savings, booked in her Budget, would amount to $2.4 billion over four years, with increased use of AI and fewer government departments.

“Businesses and households are using AI every day and, while parts of the public sector have seized the opportunity to innovate, others are still locked into outdated ways of doing things that prioritise box-ticking over outcomes.

“That is not acceptable or sustainable so the Government is putting a sinking lid on agencies’ operating budgets to drive progress on three key goals.

“Those goals are streamlining the number of government agencies and entities, digitising customer-facing and back-office government functions, and restoring public service numbers to historic norms,” she said.