What the Finance Minister asked about the public service cuts


Just like that - more than 1000 jobs gone.

The Ministry of Education and Oranga Tamariki are two of the government’s biggest departments, so the scale of job cuts there were always going to be some of the largest.

Everyone’s situations will be different but for anyone who’s abruptly lost their job before with the sudden falling of a guillotine, you’ll know how deep it can cut - and how tough it can be to bandage up the damage.

And OIAs show that in making the decision, the Finance Minister sought no specific advice about the impacts of potential public service cuts in some key areas.

In an Official Information Act request on the Treasury website, the Treasury was asked to provide its forecasts on the impacts of the reduction of the public service budget by 6.5% and the reduction of public servants to 2017 levels.

The request asked for the “flow-on effects” of the cuts, “this includes but is not limited to considerations of impacts on business and industries such as hospitality, the property market, the welfare system, transport, education, and health.”

“Information not held.” That was the response from the Treasury, the government’s economic and financial adviser.

“Given the stage we are at, our work to date has not included advice relating to the broader flow-on impacts described in your request,” the Treasury said.

“I have searched Treasury’s records and have not located any information within the scope of advice on the broader economic impacts for any scenarios that relate to a reduction of the public service workforce.”

The OIA was dated January 24 but Stuff asked the Treasury if the work had been done since and it said the final decisions about the cuts would be made in the Budget and given those decisions are live and not yet confirmed, “we have not done further analysis of the flow-on impacts of savings at this stage”.

To pay for her tax cuts, the Minister of Finance wrote to ministers to say department targets for staff cuts should be informed by public servant headcount growth since 2017 - there’s been an increase of 16,000 staff since then.

Willis had promised no cuts to frontline staff - though the lines between what is frontline and back office are blurry - and she said she believed the public sector cuts could in fact be job-neutral.

“We expect in the Budget to create more new frontline roles than are taken from the back office.”

Stuff has been tracking the job losses and, with the Oranga Tamariki and Education cuts now added, 3001 roles have been - or are proposed to be - disestablished.

Finding 3000 frontline workers is a lot.

To use Willis’ own definition, that’s 3000 teachers, police and corrections officers, health workers and, presumably, now social workers with the Oranga Tamariki job losses.

When asked why she didn’t seek any advice about the broader flow-on effects of her cuts, Willis told Stuff that the advice she’s received is that government spending has risen dramatically, inflation is too high, interest rates have risen sharply and that’s hurting mortgage holders, small businesses and the wider economy.

“It’s very hard for any cafe or retailer to do well when the customers they depend on are being slammed by a cost-of living crisis and sky high mortgage payments. Our government is taking the steps needed to get inflation, debt and interest rates back under control,” Willis said.

Council of Trade Unions policy director Craig Renney, who used to help prepare Budgets under the previous Labour finance minister, said it was unusual to not do that kind of due diligence about a major government initiative.

“Certainly, you would seek advice that either confirms your position, or if it doesn’t confirm your position, gives you alternatives that you may then choose in order to achieve the same end,” Renney told Stuff.

Without that evidence Renney said the Finance Minister shouldn’t be making statements about the value of its cuts programme to the economy.

“Right now it doesn’t have any evidence that the current programme will help deliver a stronger economy. It doesn’t have any evidence that it will help reduce the cost of living. It doesn’t have any evidence that it will help reduce inflation.”

Treasury said the impacts of the Government’s tax and savings decisions would be reflected in the Budget.