Kyoda.
I'm Chelsea Daniels and this is the Front Page, a daily podcast presented by the New Zealand Herald. Thousands of jobs have gone, millions of dollars have been spent on redundancy payouts, and it's not over yet. As the public sector continues to tighten its belt. Budget twenty twenty four sets a target for one point five billion dollars worth of.
Cost savings, with estimates for.
One billion dollars in further savings over numerous financial years. But as the axe falls, there are questions over whether the cuts will hit the front line, something the government's promised will stay intact. Today on the front page, Newstalk ZB reporter Azariah Howell joins us for an update on whether changes have stayed in the back room and how many more jobs are at risk. Azariah, what did Budget twenty twenty four reveal about the extent of public service cuts so far?
Yeah?
So.
It was Nikola Willis's first budget as Finance Minister and a lot of these agencies had been essentially counting down to this day where cost savings could be revealed. The government had previously signaled before the budget was released that it was one for the front line. Now that word has been used back and forth in terms of the public sector and the public service agencies have been chasing
down these cost savings. They've got these targets of six point five to seven point five percent and all would be revealed May thirtieth on that big budget day.
Now, before budget Day, there were.
Thousands of rolls on the line proposals, but the budget really confirmed what had been ticked off and what had been missed, what agencies did, how many jobs were on the line, and things like that. So departments were essentially asked to identify savings options and these were essentially prioritized to be on low value programs or programs that don't align to the government's policy objectives and also what it
deems back office functions. Now, contractors and consultants have also been on the line quite a bit, and it has been a bit of a controversy recently as some agencies have had to hire contractors and consultants to deliver their job cut proposals, which has been a bit of a
tricky one. I suppose the government had a target of finding one point five billion dollars worth of savings, so quite a chunk of cash there across the public sector, and it's something that was achieved according to the budget. So if we crunched the numbers, some of the agencies went above their targets, some of them fell short.
Keeping in mind these were on.
Average targets, there's not really a penalty if you were to miss it. However, some agencies have further savings. Now. A few days before the budget, I revealed an internal document that stated that some agencies were expecting and I quote three to five years of financial sustainability. Now that has come true as of the budget. It estimates a further one billion dollars in quote further savings and revenue measures.
Is to be needed per year.
Now that's through to the twenty twenty seven to twenty eight financial year, so we'll have a lot more May thirtieth or whenever the next budget day is to see what else happens. Some agencies are seeing savings be reinvested or retained to support the frontline. One of those is
the Department of Corrections. It was given a savings target of six point five percent, essentially meaning one hundred and eight point six million, and it found one hundred and ten point five million of savings, which is all going back into the department for its front line. Now, a lot of other agencies had found multiple million dollars worth of savings. Some agencies, including the GCSB, exempt from cuts but had actually found savings instead. And another thing that
we're looking at beyond the budget. This is quite an interesting part of it, is that agencies have to look beyond May thirtieth, and some of these have to find more cuts and more savings. Ministry for the Environment, for instance, has to find forty four point four million dollars worth
of further savings. Big ones at the Ministry of Business, Innovation and Employment mb which is deemed a mega ministry by some now it was given a savings target of seven point five percent, meaning roughly two hundred and thirty three million, and it's signaling two hundred and fifty four million in further savings, so that's actually higher than what it had cut at that point as of the budget, which confirmed what was on the line.
Now.
Essentially what we're seeing is some reprioritization those agencies that are deemed front line. I suppose the Ministry of Health also reprioritizing savings. OTTO Otamadiki also putting those savings back into supporting the front line. Now there are other proposals that also somewhat align with the budget and the public sector. There's this talk about five hundred new police officers as well, which we'll be keeping an eye on.
In all, how many jobs have been cut or thereabouts thus far?
Yeah, so the tallly is around four thousand dish. I mean some of these proposals, some of these confirmed, and some of the tallies are roles that have been essentially cut because government work programs have been cut from the new government, so things such as people working in three waters are no longer having those roles. But in terms of the cost savings there, we're definitely in the thousands. And it seems like we're not off the hook yet in terms of what's on the line.
So we're told these cuts would only be to back office roles, and yet we're seeing that there's hiring freeze in public hospitals, that costs have been cut out of school lunches, that disability services have been rolled back, and more than four thousand people have lost their jobs, half of them in Wellington.
Why was the Foreign Affairs Ministry exempt from the cats.
Yeah, so this was a really interesting one, a good scoop from The Herald's deputy political editor there. So the Foreign Minister Winston Peters, essentially gave m FAT a savings target of one percent. Now, going back to what we were talking about before, other agencies had a saving target of six point five to seven point five percent, but
the Ministry of Foreign Affairs only had to find one. Essentially, it was in line to contribute thirty five point one one million dollars to the savings, but Winston Peter's office, who is the Minister of Foreign Affairs, he confirmed the cuts were scrapped and they were looking at smaller cuts. Now, this is quite an interesting one.
Obviously.
The Ministry of Foreign Affairs and Trades budget in terms of the budget books, is being described by Peters as balanced. He's calling it a modest cut as well. So that is quite an interesting one in terms of what's been exempt from the cutting exercise as well.
Previously noted the GCSB was also.
Exempt from cuts, but it had actually, according to the budget documents, found seven point six million dollars worth of savings. So those savings are still being found even by agencies that didn't have to do them.
Health Ministry staff have been firing back at.
The idea of a pay freeze. You've seen some internal documents from the ministry. Hey, what's the situation there.
Yeah, so this is another interesting one. Now, these agencies have put forward a lot of different proposals in terms of how they actually meet these savings targets, and the Ministry of Health, which has quite a lot of employees, has put forward a proposal. At the time, it was a proposal to not apply pay increases for people above a sort of met range salary and that would propose
to start this year. Now, workers were opposing the plans in the feedback which has been revealed from documents leaked from the Ministry of Health, and essentially the feedback was, I suppose so dire that it prompted a change of heart from the ministry itself. The feedback, which can be revealed in those documents, workers were saying it created feelings of being undervalued, potentially marginalized. To others said it was demoralizing,
some calling it tone deaf. With the current economic environment, obviously a lot of struggles in the economy right now, the cost of living still a major topic for a lot of people.
It was also suggested.
That people on higher incomes and bigger salaries could essentially go without, and it was also ideas around the Health Ministry were floated around working fewer hours on the same pay and then adding more leave. They also looked at the idea of freezing vacancies.
But essentially this idea.
Of a pay freeze was opposed so much by these staff in these documents that the agency had to do a U turn. Now all of these agencies have to do consultation on the cuts. They have to speak with their staff about what's going on. It is part of their agreements. And in terms of this, there was a
really significant amount of feedback. So the Ministry changed its mind from that pay freeze proposal and it instead made it so that people in sort of lower to mid range salary bans would get a one off payment and then people on those higher salary bans, as we say, could go without.
Well, they are going without. Now.
These increases, these pay rises will take place after talks with staff in September. The payments themselves will be made in October and backdated to July. Now July is a pretty significant date in terms of the public sector. We'd been talking before about May thirtieth budget day, but now July the first is the big one that we're all
looking to as well. In the Ministry of Health, it's been a pretty controversial one with changes to the Suicide Prevention Office, a back and forth between the Ministry of Mental Health Matt do you see there the agency as well as looking at leasing further flaw space on its offices in Central Wellington. So that's an idea being floated by some other agencies as well, including the Health Ministry.
And a quote from this document as well, which is quite interesting and not something that all of the agencies have said, is and I quote, we're not expecting to need to make further personnel reductions based on the current fiscal settings. So that implies that what we've got on the table now at the Ministry of Health, in terms of those roughly one hundred and thirty four job cuts, I believe might be the end of it. Now that may not be the case for everyone.
With all these jobs comes redundancy payouts, hey, and they're starting to rise already in the tens of millions.
So I think one of the questions that people are going to be asking themselves in the public sector and among ministers, is how much would the government want to spend on redundancy payouts? Most people don't think that's a very good use of public month.
What is the suit situation with having to pay for staff being laid off at the moment.
Yeah, So those numbers are just coming out. Obviously, these proposals had been on the line for some time. Some of these agencies are working to different schedules, different time frames, so these redundancy payouts are only just really being known now. And what we're seeing is a few of those have
been revealed. One of them, notably MEGA Ministry, the Ministry of Business, Innovation and Employment and its total cost of staff redundancies was more than eight million dollars as of May thirtieth, so that was when that budget was unveiled. The Economic Development ministimilusly revealed the numbers to Labour's EI Shaviril and a written parliamentary question which is publicly available to view. I took a look at it and found
some other numbers as well. The redundancies at the New Zealand Customs Service totaling two point six million, nearly two point seven. In terms of those numbers. There, Customs planning on concluding its change process soon, a lot of agencies looking to that first of July. Now, some people may assume custom savings would be reinvested. I suppose gives a similar vibe as police and corrections. Custom savings will not be reinvested to the front line, which is an interesting
take there. And now Customs redundancy cost is estimated to be around two point nine million dollars in total. So yeah, nearly three million dollars from Customs, about eight million from MB so we're looking in the double digits just for two of these.
We've also got some.
Numbers from the Ministry for the Environment as well. The Ministry for the Environment in the millions as well. In terms of those payouts so far one point five million, but that's as of May thirtieth.
It's changed.
Proposals still ongoing. Voluntary redundancy open for quite some time now. We are as open till August sixteenth. So in terms of these payouts at the Environment Ministry, one point five million dollars as of May thirtieth. Will it be more, We'll have to wait and see. But staff have until August to apply for voluntary redundancy, so it definitely could
be more. Now this is just three agencies of many many more so in terms of these redundancy payouts, we'll have to wait and see, but it does look as if it's going to be in the tens of millions, if not more than that, in terms of the payouts to these staff. Now, it's also interesting the payouts to the Ministry of Business, Innovation and Employment don't actually include sort of everything. So it doesn't include the final fortnightly
payment and you'll leave. It doesn't include time and lou or any other payments that people might be entitled to, so it's just straight redundancy. So I guess in terms of the payments to staff have been laid off, probably more than that. At the Ministry of Business, Innovation and Employment.
Last week was scrutiny week at Parliament. Nicola Willis has confirmed the government intends to have performance based pay rises for public service CEOs. The latest advice to I've received is that public service leaders on average receive a pay at a rate of around fifty to sixty percent of their private sector counterpart. The policy has been called a bit tone deaf by labor as it comes as obviously thousands of public servants are being laid off.
What do people you've spoken to think about it?
Yeah, so it's a bit of a controversial one. I mean, people on the political left are sort of slamming the proposals, essentially suggesting that it's not really fair with all of these people being laid off, I mean, why should those at the top on the highest salaries be getting an increase. But the Finance Minister and Public Service Minister to Nichola Willis is essentially selling it by saying that this will
get results. It's also worth noting I suppose that some agencies and some people at the top have been under a remuneration freeze, not having any increases in their pay for quite some time as well. But yeah, in terms of performance is quite an interesting topic.
There. Kind of reminds me as well.
During the election, people were talking about performance pay for teachers, would that bring better results? Obviously a lot of back and forth about whether or not that's actually a good policy. Niicola Willis saying it it likely won't come into force for the next twelve months or so, so it might come into force once the public sector has kind of cooled down a bit in terms of all of these ongoing job cuts, and it's maybe in a I guess a more chilled out state.
We'll have to wait and see for that.
And Asarah, finally, you're based in Wellington.
What sort of impact all these job cuts having on the city itself.
Yeah, it's actually really interesting to see. I suppose how much of an impact this is having. Seems to be a lot of what people are talking about now. I live nearby Central Wellington and I've been walking around places like the Terrace Lampton Key, and I overhear people having conversations about these cuts, and I try not to listen in, but yeah, I mean I overhear people having chats about
what's going on. A lot of people in Wellington also know people who are public servants, know people who might be impacted.
By this as well.
Now, a number of house price reports have said this has an impact on housing. It's also apparently having an impact on retail spending. We've heard some recent news that there are quite a few empty storefronts around sort of Willis Street, Lampton Key, Central Wellington. I mean this is prime retail area. This is places where people want to go, want to spend money, and want to set up shop apparently, but it seems like that's not as much of the
case anymore. It seems like there's a reduction in spending in terms of those nice to haves. We'll just have to wait and see. In terms of the total impact,
obviously a lot more as still going on now. Agencies are looking at implementing a lot of their change proposals and plans as of the first of July, the start of the political financial year, So in terms of the total impact we might see more sepen as of July first, In terms of the impact to retail spending, house prices, and I guess just the overall mood of Wellington, which
you could argue has perhaps fallen. I mean, there's been issues of water, there's been issues of quake, strengthening buildings, a quite expensive budget, so yeah, there's quite a lot going on in the city. And in terms of the retail sector obviously hasn't been under a good period for quite some time, so I can't imagine this will be
helping it. Essentially, the government and the Finance Minister are trying to put in a sort of vibe of fiscal scrutiny and this responsible spending across the sector that will go on for multiple years in terms of getting those results for people.
Thanks for joining us Azariah. That's it for this episode of the Front Page.
You can read more about today's stories and extensive news coverage at nzed Herald dot co dot nz. The Front Page is produced by Ethan Siles with sound engineer Patty Fox.
I'm Chelsea Daniels.
Subscribe to the Front Page on iHeartRadio or wherever you get your podcasts, and tune in tomorrow for another look behind the headlines.