Redundancies could top $100m: Seymour
It is “very possible” the National-led coalition government will spend hundreds of millions on public service redundancies, Regulation Minister David Seymour says, as part of the government’s ruthless drive to shrink the state and pay for tax cuts.
The ACT Party leader campaigned on culling 15,000 jobs from the public service, but concedes job losses as part of the savings drive ahead of the May Budget – where ministries are pushed to find up to 7.5% worth of of cuts – won’t be as high as that.
“Like many things, the Government is not going as far as ACT would like to go,” he said.
When asked whether the government could be spending hundreds of millions on redundancy payments in the immediate future, Seymour said it was “very possible”.
However these payments – roughly a six-month salary – were worth it because it would save the government in the longer-term, he said. Finance Minister Nicola Willis will on May 30 reveal the full cost savings in the Budget.
The public service spent $12.6 million on 180 redundancies last year, at an average of $70,000 per redundancy. A 7.5% cut to the public service workforce – which was 64,222 full time equivalent roles at September 30 – would total more than 4000 jobs. Even two thousand redundancy payments at last year’s average rate could cost the government more than one hundred million dollars.
The Government is under pressure to deliver its promises for tax relief for every income level, and to pay for its policy program. Deputy Prime Minister Winston Peters has said the government has a $5.6 billion fiscal hole, using analysis from the Sunday Star Times.
The Government is also facing huge costs for its campaign promises, such as the estimated $24b needed to fund its roading plan, which it says it will fund by tolling and time of use charging, “as part of a wider package of transport revenue and investment tools”.
Public servants are also bracing to find out if their jobs are on the line and a number of department heads are due to share consultation documents on reductions with their staff between early and mid April, their union said.
Stuff on Thursday revealed redundancies are on the way for the Ministry of Primary Industries (MPI), Ministry of Business, Innovation and Employment (MBIE), and Ministry of Health, totalling about 406 roles. MBIE is expected to announce more cuts while other large ministries, such as the Department of Internal Affairs and the Ministry of Social Development, are yet to publicly say how many jobs may be culled. The department is reported to have 2700 staff, while the ministry which provides income support and employment services employs more than 9000 full and part-time staff.
It comes as high inflation and high interest rates mean people spend more on essential items and their mortgages. The Reserve Bank is also forecasting for unemployment to rise by the end of the year.
Willis has for months refused to say how many people would lose their jobs, but on Thursday said those made redundant would be able to find employment elsewhere – despite the tough economic environment.
A source at MPI said staff have been working into the night to find cost savings.