National keen to rip into ‘back-office’ public service spending

Thursday, 31 August 2023

National wants to rip a major chunk out from public service spending, promising to target “back-office” bureaucracy while cracking down on high-paid office contractors.

Labour’s public service slash would stay under a National government, after Finance Minister Grant Robertson announced on Monday a permanent requirement to tighten belts by cutting 1% or 2% to baselines.

Adding to that, National would expect an average 6.5% savings dividend from across the public service, with agencies with high levels of growth, such as the Ministry for Business, Innovation and Employment, expected to cough up more than others.

It was expected to pay for part of the party’s tax policy, while critics say frontline services will suffer.

The amount per year National wants the public service to cut would be equivalent to thousands of jobs – but the party’s finance spokesperson Nicola Willis was adamant the savings could mostly be found in other areas.

Willis said that could include money for advertising, the budget for farewell parties, scrapping some vacant positions “and stopping some new hires with a view to reducing headcount in non-essential back-office roles, such as communications and policy”, and ending work programmes such as Fair Pay Agreements.

Agencies such as Te Whatu Ora – Health NZ, the Ministry of Education, Corrections and Police would be excluded, but expected to redirect “savings found in the back-office” into the frontline.

Contractors and consultants

On top of the Government’s plan to cut contractor and consultant spend in the public service by $165 million a year, National is taking aim to the tune of $400m a year, with expenditure caps to be introduced next year.

National would also put restrictions around the use of contractors in the public service performing the work of permanent employees.

“Instead of hiring people as full time employees, they’ve instead hired people at a much higher rate as contractors,” Willis said.

“We want to see a move away from that practice. We think it's preferable to have people who are instead hired as workers, as employees.”

Vacancies

But both National and Labour are also taking aim at vacant positions.

Asked if National’s cuts would result in job losses, Willis said there was a large number of vacancies “and we would expect that many of those vacancies will not now be filled”.

“We do expect that there are some roles that will no longer be required because there are programmes of work ending or things that are no longer a higher priority.”

Public Service Minister Andrew Little said National’s proposal would have a serious impact on the frontline.

“The 1 to 2% cuts in funding that we've talked about this week is confined to the back office functions, not frontline services. If you get to 8%, you cannot get 8% cuts without affecting frontline services.”

National Secretary for the Public Service Association Duane Leo said the “targeting of the back office is simply short-sighted”.

“Frontline services need the support of a strong back office.”

Leo said National’s cuts would go “much deeper than current belt tightening underway”.

“This will impact a wide range of services that are supporting New Zealanders including our most vulnerable, backing businesses to thrive and dealing with our long-term challenges.”

'We don’t see how this plan allows for the ongoing and rising investment the public sector requires to ensure New Zealanders can continue to access the services they need and ensure we can deal with our long-term challenges.”

Instead of setting a cap or sinking lid on public service roles, Willis said they would have the expectation of an efficiency dividend.

“We will be setting a requirement for public service agencies to recommend to us what backroom reductions in cost they will deliver in order to provide that efficiency dividend.”

“We want to let the people who know the agencies best make the recommendations about the best way to achieve these savings, without compromising frontline services.”