Immigration New Zealand raid six properties in fraud investigation, the Government cuts back on consultants and contractors plus job listings fall but why applications are higher than ever. Video / NZ Herald
Prime Minister Chris Hipkins said he didn’t expect significant job losses within the public service sector after announcing a spending crackdown.
Hipkins and Finance Minister Grant Robertson announced almost $4b worth of savings, booked over the four year forecast period by cracking down on contractors and consultants. That is on top of $4b worth of savings announced at the Budget.
Hipkins told TVNZ’s Breakfast the cuts could be made without cutting public services.
“It won’t be great for the consulting firms but we don’t expect there will be significant job losses within the New Zealand public service.”
Hipkins told Newstalk ZB New Zealand was paying the economic price for spending that supported people through the pandemic.
Specific programmes, like the Covid-19 emergency response, have been cut or have had “underspends” returned to the Crown because they are no longer necessary, but the largest cuts come from a sweeping reduction to agencies’ baseline expenditure.
“Most of the departments will be able to meet these savings through measures such as not filling some vacancies, reducing contractor spending, and scaling back some of the projects that they’re doing, rather than making cuts to the services or laying people off,” Hipkins told AM.
Half a billion dollars has been saved from the 2025/26 Budget and subsequent Budgets, by trimming agencies’ baselines by between 1 and 2 per cent. The largest cuts came at MBIE, which had its baseline cut by $110.8m, followed by the Ministry of Education, which had its baseline cut by $69.7m.
The Government said these cuts do not affect frontline services.
National finance spokeswoman Nicola Willis said the Government has spent Kiwis' money with reckless abandon, Photo / Mark Mitchell
National’s finance spokeswoman Nicola Willis said the cuts were “far too little and far too late”.
“Today Grant Robertson has reached peak Labour. After six years of spending New Zealanders’ money with reckless abandon, he’s now finally admitted he has a problem - six weeks out from an election,” Willis said.
National has not yet released its own tax plan, or its spending plan. Willis said the former would be released this week and it would be funded entirely by spending re-prioritisations and revenue changes, possibly revenue hikes.
“That tax plan is fully funded, which is to say it will not require a dollar of borrowing or extra spending. Instead, it will be funded through a careful programme of spending reprioritisation and targeted additional revenue measures,” Willis said.
Act leader David Seymour said the cuts were “too little, too late”.
“He’s had a chance to manage the books responsibly. But all he’s done is given New Zealanders a cost of living crisis,” Seymour said.
Act Party leader David Seymour said the Government has had its chance to manage the books. Photo / Marty Melville
The Green Party said Labour should reconsider a wealth tax so it did not need to look for cuts.
“The Labour Government is constraining itself unnecessarily by refusing to change the tax system to raise revenue from the wealthiest few which can be used to support everyone in Aotearoa. The time is now for a wealth tax,” said the party’s finance spokeswoman Julie Anne Genter.
Unlike previous government savings exercises, Robertson said the money freed up here would not be spent on other things, but it would be booked as a permanent saving.
“The Government’s published accounts for the eleven months to the end of May showed that tax revenue was more than $2 billion behind where Treasury had forecast it to be at the Budget. It should be noted that government spending was in line with forecasts during this period.” Robertson said.
“Since May we have seen further deterioration in the global economy, particularly in China. This will continue to have a direct impact on the New Zealand economy, and it is important that the Government responds to meet our balanced and responsible fiscal goals,” he said.
Thomas Coughlan is deputy political editor of the New Zealand Herald, which he joined in 2021. He previously worked for Stuff and Newsroom in their Press Gallery offices in Wellington. He started in the Press Gallery in 2018.
