What is next for public service?

The first few months of 2024 have seen the current state of the public service shift. It has become a weekly occurrence for cost-cutting proposals to be released or find its way into the media, as a constant stream of job-cut proposals are revealed from each ministry at a time.

Former United Future leader Peter Dunne said the drop in productivity, morale and uncertainty in the public service and consumer confidence in Wellington, would have an effect. “It will take some time to settle down.”

In past reductions of the public service, Dunne said there was a period after of officials adjusting to the new normal and the government understanding what the resized ministries could achieve.

He expected that to repeat this time around and, six months to a year after, “once the wave of redundancies have occurred and once things have settled down ... there you can start to see the process of normality returning”. “But it’s going to have to require good leadership from the public sector, but also clear leadership from ministers about what their expectations are.”

Dunne said a speech by Finance Minister Nicola Willis or Prime Minister Christopher Luxon to set out their aspirations, expectations, priorities in the public service, and what the Government was looking to accomplish “would give a bit more clarity of what’s happening”. “It would also give the public some assurance this isn’t some ... slashing exercise.

“There may well be a deeper plan, but it’s very deep.”

He said there had been one element of the debate missing from the Government, and that was the portion of the vacant positions within the proposals. “The perception the Government has allowed to be created is that they’re thrashing all these jobs.”

Looking at the publicly available figures on determined and proposed role reductions, Infometrics chief executive and principal economist Brad Olsen said a “not insignificant amount” were vacant positions being cut. “Currently, on the number that have reported if [their proposal numbers] are vacancies or real people losing their jobs, there’s nearly 1400 that are definitely or likely to lose jobs that we know of.

“That’s around 71% of the total, broken down into job losses and vacant roles.”

On the potential outcomes of restructuring across the public service, Olsen said, “firstly these are real people’s jobs, even if there are wider macro benefits for the public sector that’s cold comfort to those who are losing their roles”. He said the wider public service would be looking at how they delivered services differently, while there was a question if the changes coming through now were “the best way to achieve the priorities and outcomes the Government wants”.

He said the challenge for the Government was while their policy commitments “will cost money ... their revenue isn’t quite as strong as they first thought”, and they do not want to borrow more.

Olsen said there was the potential for either further, or sustained or continued pull back in funding in the public service.

Compared to previously large-scale slashes in the public service, Massey University politics professor Richard Shaw said this round was different, “in the sense that it has been much more high profile and this new administration has possibly made more of a virtue of going after the public service”.

He said there was a “tremendous risk” to the country of good workers leaving, as some public servants start to look overseas for jobs.

“We don’t have a bottomless pit of bright, talented public servants. We really can’t afford to lose the kind of intellectual property that’s walking out the door.

“Over the medium to long term, it runs down our capacity to rise to the big issues that confront us.”

He said governments were staffed by “professional politicians that are generally amateurs in their policy field”.

“They need people who know their way around the traps in conservation or finance or social development, or whatever the policy field is.”

Shaw said it was “hard to tell exactly how long or even if there will be a ‘bounce back’”.

“[The Government] will keep a very tight watch on this and make it an article of faith that the number of people employed in the public service will not be returning to anything like the number the last Labour government left the country with.

Asked when he thought public servants may feel more secure in their jobs again, when more regular pay rises would be back on the cards – “I wouldn’t imagine it would return to normality next year. There’ll be ... all sorts of other scars that are left as a result of this process.”

Shaw said from previous restructures as new ministers made the move into Government, what was needed was a balance of new people with fresh ideas against the need for institutional wisdom.

“Sometimes the public service can be really hard to shift ... so it’s not unusual or particularly unreasonable for a new government to have some concerns about getting responsiveness out of the public service.”

Victoria University emeritus professor of public policy Jonathan Boston described the cost-cutting exercise as exceptional and not seen in New Zealand since the 1980s.