Willis confirms thousands of public servants to lose jobs, saving government billions

Tuesday, 19 May 2026

Thousands of public sector jobs are set to be cut under a new plan due to be announced by the finance minister on Tuesday.

Thousands of public sector jobs are set to be cut under a new plan announced today by the finance minister.

The plan will to seek to reduce the size of the public service to 1% of population. It currently made up 1.2%.

Coupled with increased use of Artificial Intelligence and merging some ministries, the policies will save $2.4 billion over 4 years.

Initial reaction from the Public Service Association described the move as “an act of wilful destruction”.

The Finance Minister has announced a plan to slash thousands of jobs from the public sector, with the savings booked in her Budget stretching over $2 billion.

In a pre-budget announcement today, Nicola Willis and Public Service Minister Paul Goldsmith confirmed the Government wants to trim the core public service back to 1% of the population - it currently makes up 1.2%.

In practical terms that means thousands of jobs are on the line as the government looks to cut roles, consolidate the functions of ministries and rely on Artificial Intelligence to improve the efficiency and productivity of the public service.

As earlier reported by Stuff, the minister will to book the savings against this year's Budget, without completing the job cuts, but by introducing a target.

To report the savings in the Budget, Treasury must be satisfied the minister will follow through with it.

Cuts would devastate Wellington’s economy, the union for the public service says.

Willis says the combined policies will amount to $2.4b over four years, with increased use of AI and fewer government departments contributing.

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every day and, while parts of the public sector have seized the opportunity to innovate, others are still locked into outdated ways of doing things that prioritise box-ticking over outcomes,” she said.

“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.

Nicola Willis said she has no plans to sell off Kiwibank this term.

“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.

New Zealand’s population was reported by Statistics NZ on Monday as 5.3 million.

There were 63,657 full-time equivalents employed in the core crown service in December 2025 - equating to 1.2% of the total population. The core public service refers to employees of ministries and government departments and doesn’t include the likes of police, nurses and teachers.

By 2029, New Zealand’s population is projected to reach 5.5 million people, meaning the public service would need to be cut back to 55,000 reach the target of 1% of the population.

The Government says the target won’t be reached immediately - with headcount reductions achieved through digitisation, mergers and natural attrition.

“Progress will be monitored regularly, with agencies expected to demonstrate improvements in productivity, delivery and value for money,” Paul Goldsmith said.

Reckless cuts will hammer Wellington, says Union

'This is an act of wilful destruction,“ said Duane Leo National Secretary for the Public Service Association Te Pukenga Here Tikanga Mahi.

“It will devastate the services New Zealanders rely on every single day. This is irresponsible and reckless and make no mistake the price will be high.

'These cuts will further devastate Wellington’s economy, which has already been hammered by two years of public service job losses.“

The National party campaigned on reducing the headcount of the public service at the last election - sold to the electorate as cutting the backroom costs to funnel money into the front line.

In 2017, there were 48,000 public servants. This ballooned under the previous government but this government has not decreased the headcount. Since 2023, there have been around 63,000.

Willis has trimmed her operating allowance by $300 million, leaving $2.1b in new spending.

She had instructed government departments to not expect any new money, but fund any new initiatives they wanted to introduce through finding savings in their own baseline budgets.

The Act party announced earlier this year that it would campaign on cutting the number of departments from 41 to no more than 30.