Barbara Edmonds says Treasury ‘just doing its job’ building cuts into forecast

Thursday, 21 May 2026

Labour finance spokesperson Barbara Edmonds says she won’t criticise the Treasury for including the fiscal impact of planned public service cuts in its Budget forecasts, despite her own doubts they will be achieved.

Finance Minister Nicola Willis announced on Tuesday that the Government expected to make savings of $2.4 billion over the next four years from an overhaul of the public service that would cut 8700 jobs in favour of a heavier reliance on digital technology.

Edmonds said the cuts were arbitrary and the Government had not made clear how they would be achieved.

But she said it had to be assumed that the proposed savings had “met the requisite requirement” for the Treasury to lock them into its Budget Economic and Fiscal Update, which will be released with the Budget on Thursday next week.

Read more:

• ‘Bad news on top of bad news’: Public service job cut plan hits home in capital

• Budget 2026: Where might the public service cuts fall? The big and small ministries facing the knife

• Foreign Affairs not tightening its belt just yet - Finance Minister

The Public Service Act requires the Treasury incorporate all government decisions into its Budget forecasts, as long as their fiscal implications can be “quantified for particular years with reasonable certainty”.

Responding to questions from Edmonds in Parliament, Willis acknowledged there was a fiscal risk “all savings” wouldn’t be delivered, but said Treasury had judged that Cabinet’s decisions were clear.

Controversies have occasionally cropped up over whether individual government plans should be included in Budget forecasts.

Labour and the Greens have repeatedly questioned whether the Treasury should factor the cost of buying billions of dollars of overseas carbon credits into those forecasts, given the Government’s ongoing stated commitment to meeting net emissions reduction targets under the Paris Agreement.

To date, Treasury has merely described the potential cost as a fiscal risk.

Chartered Accountants Australia and New Zealand (Caanz) previously called out multiple governments for baking revenue from a proposed Digital Services Tax into their fiscal forecasts despite a widespread assumption — which proved well-founded — that the revenue tax on foreign multinationals would never proceed.

The bill that would have enacted the proposed tax was shelved last year, after it had been introduced to Parliament, but before its first reading.

Caanz tax leader John Cuthbertson suggested the test for whether proposed savings and revenues should be incorporated into forecasts should be whether they “seemed appropriate and made sense to a reasonable person”.

Edmonds said the public service cuts were likely to translate into a 20% cut within some departments and comments by NZ First leader Winston Peters casting doubt on the impact on the Ministry of Foreign Affairs and Trade, which is within his own portfolio, had called into question whether they were likely to be achieved.

It has emerged that Mfat will be spared the first round of budget cuts.

Edmonds said the basis on which the Treasury made its assumptions about the impact of the cuts would not become clear until some time after the Budget, when the Treasury made a so-called proactive release of Budget documentation.

Until then, she had to trust that Treasury had done the job right, she said. “I believe Treasury is doing their best. The public sector has already been beaten up enough.”