Billion-dollar public service savings exercise spelled out in Budget
Friday, 31 May 2024
The level of cost cutting within public services has been laid out in Budget 2024, revealing the agencies let off the hook by ministers and those who went above and beyond.
The public service has been in the firing line of cost cuts with Finance Minister Nicola Willis directing cost saving targets between 6.5% and 7.5%, folding in contractor and consultant savings.
Public services have been going back and forth with ministers about the level of savings, with thousands of potential job cuts announced in recent months.
Willis had been upfront that some agencies did not meet the savings targets, but others had gone further, meaning the Government had reached its savings target of $1.5 billion across government agencies - and more.
Budget 2024, published yesterday, unveiled exactly where the cuts came from. Departments had managed to save the required $1.5b annually, and had found an extra billion in savings and revenue, Willis said. .
Some of the agencies that went beyond the target:
Minister of Business, Innovation & Employment was tasked to save $233.9m a year on average across five years. It made $231.5m in baseline savings, plus an additional $254.2m.
The Ministry of Housing and Urban Development was set to find $108.8m in savings - it found $391.4 in baseline reductions and another $61.3m on top.
The Ministry of Primary Industries was given a $63.2m target. It reduced its baseline average by $75.9m and found an extra $41.1m.
The Ministry for the Environment hit its savings target of $49.1m on the head, then saved an extra $44.4m.
A number of the agencies have found savings, but were retained within the ministry - such as the Ministry of Education, which was tasked with finding $73.6m, but saved $107m, with an additional $275m found.
The Ministry of Transport saved $83.4m from its baseline, after being given a $38.5m target. It also found an extra $8.3m.
Which ministries were spared?
A number of ministries did not meet savings targets, among those was the already signalled Ministry of Foreign Affairs and Trade. It had a $98.9m target and found $15m in baseline savings. Budget 2024 also put $60m across four years into the renewal of New Zealand’s diplomatic post infrastructure in the Pacific.
The Department of the PM and Cabinet found $3.2m in savings, with a target of $6.3m.
The Ministry of Culture and Heritage was given a $37.5m target, and found $19.6m in its baseline.
Willis called the saving programme a “key aspect” of Budget 2024.
“We set out to find baseline operating savings of $1.5 billion a year on average.
“In some cases ministers chose not to progress savings initiatives, because they may have affected the delivering of important frontline services.”
Willis said “a small number of agencies have provided targeted policy savings for revenue options”.
“These have raised another billion dollars each year to go towards Budget 2024 and supporting the delivery of frontline services.”
Public Service Association national secretary Duane Leo said the Government “is simply taking the oil out of the engine of the public service and still expects it to do the same job”.
“Billions of dollars a year and thousands of jobs are being cut from key government agencies supporting New Zealanders, securing our borders, tackling our environmental challenges, building our climate change resilience, and supporting New Zealand businesses,” he said.