Inside Ministry of Health job cut proposal: ‘We need to be smaller’
Thursday, 4 April 2024
A document presented to Ministry of Health staff today is proposing to disestablish 271 roles ‒ more than a quarter of its workforce, with a net reduction of more than 100 jobs.
The 50-page consultation document, titled, ‘A future focused Ministry’, obtained by The Post, outlined proposals to reduce research spending, not offer pay rises to staff above a certain pay grade this year, and mulled voluntary redundancies for those who had jobs on the line.
“Moving through change is difficult and challenging,” the Ministry’s director general, Dr Diana Sarfati, said in the consultation document foreword.
Along with the 271-role reduction proposal, the Ministry proposed to create 137 new roles ‒ leaving a net reduction of 134 jobs. Of that 134, 67 of the roles are vacant.
The consultation document paints a stark picture, calling the size of MoH’s workforce, “unaffordable”.
The document outlines two cost saving ideas from staff that would not be going ahead ‒ a “reduction in Executive Governance Team/Senior Leadership Team salaries” and a reduction in hours for all staff. It said both ideas would be practically and legally difficult to implement.
It also is not offering voluntary redundancies to all staff. “This would not be in the best interests of the Ministry because it risks losing people and capability in critical areas and increases the overall cost to the taxpayer.”
But for those whose jobs may be affected by the reduction, MoH was looking at offering voluntary redundancies.
The level of funding it is expected to reduce is $78 million between the 2023/24 year and 2024/45. MoH needed to find an additional $20.2m in savings. That would be through proposing no pay increases for those above the pay midpoint this year, however, that would only save $2m. The other $18m would need to come from roles.
The level of saving needed was not just due to the Government’s 6.5% cost saving target , “which equates to an average of $12.6m every year from the 2024/25 financial year,” the document states.
“Historically the Ministry’s establishment has been unaffordable, however it has been managed through additional funding made available to meet unexpected demands on our resources, such as the Covid-19 response and the health system reforms.
“This more fiscally constrained environment means we need to be smaller, and we need to be smarter about how we carry out our role.”
Labour public service spokesperson Ayesha Verrall said she had worked closely “with many of the people who will be impacted by this proposal to fight to keep New Zealanders safe through the pandemic”.
“I know a lot of them will be feeling apprehensive about this change.”
Verrall was concerned about the proposal to cut jobs in areas such as regulation and monitoring.
Monitoring ensured the Ggovernment's health targets were met and the health system was functioning effectively, with cuts to that area potentially undermining the Government's promises to improve the health sector’s performance.
Verrall also said cuts to regulation could affect key areas such as vaping, which the Government wanted to crack down on, and reducing advisers would affect the technical expertise and high-quality advice that goes to the minister.
The document also targets $3.2m of research and evaluation funding.
Asked about public servants who may be losing their jobs today, Prime Minister Christopher Luxon said, “it’s tough”.
“And as we've seen over the last two years, it's been tough for people in the private sector as well who have lost their jobs. I've seen a lot of hospitality businesses closed down. I've seen a lot of small businesses closed down over the last two years because of the economic mismanagement [of the] previous administration.”
The document said MoH had “significantly reduced” its consultant and contractor spend, and expected it to be below the target of 11% of workforce salaries in the next financial year.
Finance Minister Nicola Willis has given agencies a guideline of 17% expected reduction in contractor and consultant spend.
By tightening up recruitment, and removing long-held vacancies, as well as its reduction in contractor and consultant spend, MoH saved about $30m.
The consultation ends on April 26, with decisions announced in June.
Last month, the ministry confirmed just over a quarter of all positions, including vacancies, may be affected as it looks for savings.
It was a “difficult and unsettling time” for staff, Geoff Short, the ministry’s transformation management office director said at the time.