These are the Government departments on the chopping block

Tuesday, 19 May 2026

Finance Minister Nicola Willis says the Government aims to save $2.4 billion over four years.

She says Government departments should be able to use AI to cut staff costs.

Other departments are set to merge.

13 departments are excused from the Government’s latest savings target.

The Government’s new goal of cutting public service staff costs, by telling departments to replace staff with AI, is expected to save $2.4 billion over the next four years, Finance Minister Nicola Willis says.

She outlined where that money would come from on Tuesday, during a pre-Budget speech in Auckland.

She said 13 departments would be saved from cost cutting drive, but even those departments may need to lay off staff. Parliamentary agencies, which are things like the Parliamentary Service, political staff and Ombudsman, were also excused.

Meanwhile, three ministries are already facing the axe. A merger is underway for the ministries of environment, housing, urban development and transport. They will form a mega ministry, the Ministry of Cities, Environment, Regions and Transport, which its future minister, Chris Bishop, calls “M Cert”. He said, on Tuesday, he was expecting it to cut back on spending and staff costs over the next few years.

That leaves another 25 core public service departments which have, as of Tuesday, been put on notice. All of those departments would need to cut costs by 2% at this year’s Budget, and then 5% next year and the year after, Willis said.

She said those cuts would “reflect and drive the efficiencies expected” from increasing public sector productivity, and using AI to do that.

On top of the cost reduction target, Willis also set a headcount reduction target for the public service. By mid-2029, she said core public service should equate to 1% of the population.

“Between 2017 and 2023 those numbers ballooned out to about 1.2% of the population. As part of the programme, the Government will restore public service numbers to the historic norm by mid 2029. That will be an in-principle target of about 55,000 public servants,” she said.

She said there were about 65,000 currently employed in the public service. That would mean about 10,000 jobs cut the public sector.

During a stand up, Willis said those jobs could come from the 13 departments that were excused from making baseline savings.

“They will still be expected to make use of these modern tools, to be part of merger efforts, to deliver more integrated customer services. So, we do expect that that will come with reduced headcount over time,” she said.

However, any cost savings made from those departments could be reinvested within the same department.

A full list of the departments on the chopping block for ongoing budget cuts is at the end of this article. They cover cover social services, welfare, civil defence, conservation, border security, immigration and a variety of other services.

Willis said the following departments would be excluded from the cost savings, but may still be involved in mergers:

The New Zealand Defence Force, Police, Oranga Tamariki, Corrections, the Ministry of Health, the Ministry of Justice, the Government Communications Security Bureau, the New Zealand Security Intelligence Service, the Education Review Office, Crown Law, the Ministry of Defence, the Serious Fraud Office, Parliamentary agencies and most of the Ministry of Education - except its tertiary education functions.

That list includes the Government’s biggest employers. Police, the Defence Force (NZDF), and Corrections were the largest core crown departments. There were 15,000 employed at NZDF, about 16,000 at Police and another 11,000 at Corrections.

The wider state sector, such as the health department Te Whatu Ora and schools, were also not counted in this cost cutting programme.

Cuts incoming for these departments:

1. Social Investment Agency. Employs 86 people. Its workforce has grown 70% over the past year.

2. Ministry for Regulation. Employs 93 people. Its workforce has grown 15% over the past year.

3. Ministry of Disabled People. Employs 79 people. Its workforce has grown 13% over the past year.

4. Department of Conservation. Employs 2828 people. Its workforce has grown 7% over the past year.

5. Statistics NZ. Employs 1347 people. Its workforce has grown 7% over the past year.

6. Public Service Commission. Employs 203 people. Its workforce has grown 5% over the past year.

7. Inland Revenue. Employs 4729 people. Its workforce has grown 5% over the past year.

8. Customs. Employs 1450 people. Its workforce has grown 5% over the past year.

9. National Emergency Management Agency. Employs 172 people. Its workforce has grown 3% over the past year.

10. Ministry of Social Development.**** Employs 9094 people. Its workforce has grown 3% over the past year.

11. Land Information NZ.**** Employs 833 people. Its workforce has grown 2% over the past year.

12. Ministry of Business, Innovation and Employment.**** Employs 5892 people. Its workforce has grown 1.5% over the past year.

13. Ministry of Foreign Affairs and Trade.**** Employs 1185 people. Its workforce has grown 1% over the past year.

14. Ministry for Pacific Peoples.**** Employs 91 people. Its workforce has grown 1% over the past year.

15. Ministry for Primary Industries.**** Employs 3465 people. Its workforce has not grown over the past year.

16. Ministry for Women. Employs 39 people. Its workforce has decreased by 3% over the past year.

17. Department of Internal Affairs. Employs 2496 people. Its workforce has decreased by 5% over the past year.

18. Office of Treaty Settlements. Employs 115 people. Its workforce has decreased by 6.5% over the past year.

19. The Treasury. Employs 542 people. Its workforce has decreased by 8% over the past year.

20. Te Puni Kōkiri. Employs 391 people. Its workforce has decreased by 8% over the past year.

21. Cancer Control Agency. Employs 54 people. Its workforce has decreased by 9% over the past year.

22. Ministry for Ethnic Communities. Employs 53 people. Its workforce has decreased by 9% over the past year.

23. Ministry for Culture and Heritage. Employs 125 people. Its workforce has decreased by 10% over the past year.

24. Department of Prime Minister and Cabinet. Employs 147 people. Its workforce has decreased by 19% over the past year.

25. Charter School Agency. Employs 12 people. Its workforce has decreased by 28% over the past year.

26. New housing, environment, transport ministry. Across three ministries, it had 1270 staff.