Trim fat without cutting muscle

A109 Light Utility Helicopter flight with mayor Gisborne City from the air in November 2023.

Opinion

The Government has gone ahead with its election promise to make massive cuts in what it sees as a bloated public service sector. Hopefully the cuts are being made in the right places and with a lot of thought and planning.

The first cuts will see 9 percent of positions disappear in the Ministry for Primary Industries and an astonishing 25 percent from the Ministry of Health.

Others will follow at the Ministry of Education, WorkSafe, ACC and Crown Law.

The question people will ask is, what were all these people doing?

Every ministry has been told to make savings of at least 6.5 percent from its budget. The job cuts are predicted to raise $600 million for the Government towards its promised tax cuts.

Prime Minister Christopher Luxon says too much bureaucracy had been created by the former Labour government, with 16,000 jobs added to the public service.

While he could identify and empathise with those who had lost their jobs, too many had been created by the inefficiency of the Labour government, he said.

Minister of Finance Nicola Willis said her heart went out to anybody who had lost their job in any circumstances, but no government could live beyond its means indefinitely.

But former ANZ chief economist Cameron Bagrie said the Government “was flying blind” in its savings regime because there was no ideal size to the public service.

“There will be fat in the system. I don’t think it takes a genius when you see the expense flows over the past five years; you have to wonder if that was a productive use of taxpayer money.”

However, the counterbalance to this and the big unknown was “getting the balance right between trimming fat and cutting into muscle”.

Infometrics chief executive Brad Olsen said it was clear the public service “had ballooned” in areas; some ministries had tripled in size. The increases were higher than population growth in the same period.

But there was a risk of taking the cuts too far, he said. There was a “Goldilocks zone” of value for money in the public service. Treasury had been pushing the point that government spending should have a clear value-for-money basis.

Conversations about recalibrating the right number of people working across the right number of priorities would be difficult.

Act leader Davd Seymour says the cuts are good and he would like to see more.

Taking the axe to civil servants is always popular with right wingers, but it is important that the right people are kept.