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

Wednesday, 20 May 2026

ANALYSIS: Nicola Willis confirmed on Tuesday she wanted to reduce public service headcount by 8700 over the next three years. But she didn’t say where or whom.

Willis, a long-time denizen of Wellington, knows making the decision of where those cuts might fall will be politically and technically difficult.

It is relatively easy to argue against backroom bureaucrats in general, but quite hard to get into power and actually make reductions yourself. After all, both National and ACT campaigned on some level of public servant cuts and have not really delivered ‒ the total number of public servants is essentially flat since 2023, with cuts in some areas but serious growth in the Department of Corrections. You might get to Government, propose a series of cuts to a ministry, only to have that ministry turn around and ask you exactly which of your policy priorities you are happy to drop to make up for it, forcing second thoughts.

But Willis has now indicated the Government is serious enough about further cuts to book Budget savings against them ‒ and that she is keen to see the overall number of departments reduce.

Read more:

• Labour says women paid for last Budget, public servants will pay for this one

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

• Nicola Willis’ public service overhaul goes well beyond headcount

Assuming these cuts actually happen is somewhat heroic. First National would have to actually win the election. Then it would have to convince NZ First these cuts were worth it ‒ Winston Peters has already said the election might stop any serious cuts to his beloved Ministry of Foreign Affairs and Trade. And then there is the assumption that the next government has the appetite to spend so much time focused on the machinery of government reform.

But let’s say that they do ‒ where might these 8700 headcount cuts fall?

What is a public servant?

Before we start looking, it is worth being clear about terms.

Willis has used the Public Service Commission’s definition of a public servant for her target, aiming to go from the current 63,657 to around 55,000 by mid-2029.

This definition counts all employees of core government departments but not everyone paid by the taxpayer ‒ a far larger number, in the hundreds of thousands. That means it doesn’t count police, teachers, hospital staff, or the staff at regulators like the Financial Markets Authority.

But don’t let this make you think that all 63,657 public servants are policy analysts in Wellington. (Indeed, the majority live outside the capital). Including all core departments brings in major entities like the Department of Corrections which hires prison guards and parole officers, and the Ministry of Social Development, which employs thousands of front-line staff. These two entities make up roughly a third of the “public service”.

And it isn’t just these departments on the front line, so to speak. The largest occupational type within the public service is “inspectors and regulatory officers”, which includes but is not limited to prison guards, and makes up 20% of the wider public service. In comparison just 5.7%, or about 3500 staff, are “policy analysts” ‒ a more classic public service cliche.

Willis and other ministers have indicated that they want to focus the cuts away from the front line, so we can probably assume that inspectors and regulatory officers will largely be safe. So what does that leave?

Accounting for growth

We should also note that some areas are likely to continue growing in the three years to 2029.

Corrections grew by an average of 640 staff a year in the first two years of this Government. One assumes it will probably grow by a similar rate in the years to come, leaving us with not just 8700 jobs to cut from the current workforce, but more like 10,000, at least. Growth pressures in other areas like Immigration are likely to remain too.

The departments that might be swallowed up

ACT leader David Seymour has long railed against the overall number of departments in New Zealand, pointing his finger in particular at the “population” ministries like the Ministry of Pacific People, Ministry for Women, Ministry for Ethnic Communities, and Whaikaha - Ministry of Disabled People.

Merging these departments together would certainly reduce the number of departments in total, but it would not do all that much to reduce headcount. There were just 259 staff at those ministries in 2025, so even if you eradicated them completely you are not really touching the sides.

More cuts could be available if the Government wanted to take on Te Puni Kōkiri (423 staff) and the Office of Treaty Settlements (123 staff). But this would be quite a fight to pick with a treaty partner.

Small agencies by their very nature simply don’t offer many jobs to cut. Getting rid of all 25 departments with fewer than 1000 staff would only reduce the headcount of the public service by 5800 FTEs, and that list includes a bevy of agencies no one would touch, like Crown Law, the Ministry of Defence, and Treasury.

One should also note here that there are already a bunch of departments being swallowed up into the Ministry for Cities, Environment, Regions, and Transport (MCERT) ‒ specifically Environment, the Ministry of Transport, the Ministry of Housing and Urban Development, and the local Government functions of the Department of Internal Affairs.

This will take in around 1300 staff, but a lot of them will find jobs in the new entity, as Chris Bishop has oodles of work he wants to do in this space. There will likely be redundancies for back office roles like HR and ICT that don’t need to be duplicated, but the numbers here are unlikely to be massive. If you add up all the clerical, legal, HR, and finance, and ICT staff at the three agencies being swallowed whole, you only get to 272 jobs.

So if we assume that half of those roles go and half of the roles at the smaller population ministries, we are still only looking at around 266 roles. Add in some job losses at Te Puni Kōkiri and you are still only a fraction of the way to the 8700.

The departments and roles that could be seriously trimmed

As you can see from the above, it is difficult to find massive staff cuts from simple amalgamations.

One would probably have to start making reductions at the big agencies where most of the headcount is situated. The top five agencies make up 56.6% of the entire public service.

While the Government has indicated it wants to protect front-line roles, it’s worth clarifying that it has not singled out any agencies from cuts. While Willis has exempted a range of agencies from her baseline funding cut announced on Tuesday ‒ including Corrections, Health, Justice, Education, and others ‒ she’s since made clear this won’t save them from job cuts.

So which agencies might the Government want to trim?

The Ministry of Social Development (MSD) could be seen as a reasonable place to start. It is the second-largest department and grew significantly under the last government, from around 6800 staff in 2017 to 9100 in 2023, staying mostly flat since then.

A large proportion of that workforce is social and education workers (read: front-line), but there is also a serious number of “information professionals” (1320) and contact centre workers (1155).

Inland Revenue (IR) shrank itself by around 1500 jobs after a major IT upgrade saw it reduce contact centre staff by about 750 between 2018 and 2023. It’s not hard to imagine some big AI rollout seeing a big reduction in MSD staff here too. You could lose quite a lot of contact centre work and still describe the changes as largely protecting the front line.

Now we come to the “information professional” ‒ a very nebulous term.

According to the Public Service Commission, this includes “data analysts, business and intelligence analysts, service designers, non-policy advisers, librarians, archivists, project managers, statisticians, and governance roles”.

This job type has rocketed up massively in recent years, from 5400 in 2017 to 8700 now, with the growth concentrated in a few key ministries. It is now the third most popular profession in the public service, just ahead of the similarly nebulous term “managers” ‒ of which there are 7400.

One assumes this is a job-type that is somewhat AI-vulnerable. Tools like Claude and even Copilot can make data analysis that used to take teams of Excel wizards days to produce somewhat easier. But will a Government so obsessed with tracking targets really want to reduce that seriously the number of people dedicated to tracking targets, or will AI just let them produce even more live dashboards and targets?

Other big haunts of these “information professionals“ include the Ministry of Business, Innovation, and Employment (MBIE) and IR. These are big workforces that do big things for the Government ‒ but also have the scale to perhaps absorb some fairly serious losses.

The fourth-largest occupation group is “managers” ‒ a group of 7300 workers which presumably covers everything from PSC head Sir Brian Roche to a 20-something who just got promoted to lead a team of five.

Here large ministries quite naturally dominate ‒ MSD has 931 managers but also operates more than 200 separate offices across the country. You can probably trim some of those managers, but if you are leaving the “front line” alone this becomes difficult. Corrections has 960 but again a decent whack of these will be extremely front-line.

That isn’t to say there aren’t big numbers of managers elsewhere that could be the target of trimming. Justice, MBIE, and Education have around 700 managers apiece ‒ you obviously wouldn’t get rid of all them, but a gradual reduction might be appealing. Just 200 fewer managers at each organisation would get you 600 jobs ‒ more than all we could find merging those smaller agencies.

Education itself is an interesting target. It’s a big ministry (3800 staff) but over half of them are broadly front-line learning support staff. That leaves a decent whack of clerical, ICT and information professional staff ‒ but it’s also worth remembering that the ministry is responsible for a sprawling education system featuring more than 70,000 teachers and other staff, and will be in the midst of carrying out substantial NCEA reform next term. How far will Education Minister Erica Stanford really want to cut here?

The highest concentration of managers as a proportion of overall staff are in the population ministries discussed earlier ‒ but again the absolute gains available from eliminating these roles is fairly small.

What about centralising?

One move to cut quite a few jobs across many areas could come not from rolling up entire ministries but centralising certain functions such as ICT, finance and HR.

There around 2200 ICT staff across the public service and 3300 people in “legal, HR, and finance”. Many of those lawyers won’t be able to be centralised, and some agencies will jealously protect their HR departments (such as the intelligence agencies) ‒ but that doesn’t mean some serious centralisation isn’t possible here.

Add in the centralisation of contact centre workers (5200) and you could get yourself a decent bit of the way to that 8700 goal.

So can they do it?

It remains to be seen how serious the Government ‒ if re-elected ‒ really is about public service cuts at this scale. They can make the point quite readily that this is only taking the size of the public service back to the 1% of the population it was in 2017. But as the above data shows, a lot of that workforce is tied up in front-line service roles. By asking for such substantial cuts and cutting out the front-line, the Government has defined itself into a corner.

There is the potential that AI really does make it possible to lose thousands of information professionals and other backroom staff, while still producing the dashboards, assurances, and targets ministers and Parliament demand. But that's quite a large bet.