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Speaker 1: Kyoda.

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Speaker 2: I'm Chelsea Daniels and this is the Front Page, a

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Speaker 2: daily podcast presented by the New Zealand Herald. Thousands of

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Speaker 2: jobs have gone, millions of dollars have been spent on

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Speaker 2: redundancy payouts, and it's not over yet. As the public

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Speaker 2: sector continues to tighten its belt. Budget twenty twenty four

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Speaker 2: sets a target for one point five billion dollars worth of.

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Speaker 1: Cost savings, with estimates for.

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Speaker 2: One billion dollars in further savings over numerous financial years.

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Speaker 2: But as the axe falls, there are questions over whether

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Speaker 2: the cuts will hit the front line, something the government's

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Speaker 2: promised will stay intact. Today on the front page, Newstalk

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Speaker 2: ZB reporter Azariah Howell joins us for an update on

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Speaker 2: whether changes have stayed in the back room and how

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Speaker 2: many more jobs are at risk. Azariah, what did Budget

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Speaker 2: twenty twenty four reveal about the extent of public service

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Speaker 2: cuts so far?

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Speaker 3: Yeah?

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Speaker 4: So.

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Speaker 5: It was Nikola Willis's first budget as Finance Minister and

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Speaker 5: a lot of these agencies had been essentially counting down

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Speaker 5: to this day where cost savings could be revealed. The

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Speaker 5: government had previously signaled before the budget was released that

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Speaker 5: it was one for the front line. Now that word

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Speaker 5: has been used back and forth in terms of the

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Speaker 5: public sector and the public service agencies have been chasing

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Speaker 5: down these cost savings. They've got these targets of six

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Speaker 5: point five to seven point five percent and all would

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Speaker 5: be revealed May thirtieth on that big budget day.

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Speaker 3: Now, before budget Day, there were.

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Speaker 5: Thousands of rolls on the line proposals, but the budget

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Speaker 5: really confirmed what had been ticked off and what had

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Speaker 5: been missed, what agencies did, how many jobs were on

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Speaker 5: the line, and things like that. So departments were essentially

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Speaker 5: asked to identify savings options and these were essentially prioritized

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Speaker 5: to be on low value programs or programs that don't

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Speaker 5: align to the government's policy objectives and also what it

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Speaker 5: deems back office functions. Now, contractors and consultants have also

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Speaker 5: been on the line quite a bit, and it has

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Speaker 5: been a bit of a controversy recently as some agencies

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Speaker 5: have had to hire contractors and consultants to deliver their

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Speaker 5: job cut proposals, which has been a bit of a

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Speaker 5: tricky one. I suppose the government had a target of

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Speaker 5: finding one point five billion dollars worth of savings, so

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Speaker 5: quite a chunk of cash there across the public sector,

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Speaker 5: and it's something that was achieved according to the budget.

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Speaker 5: So if we crunched the numbers, some of the agencies

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Speaker 5: went above their targets, some of them fell short.

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Speaker 3: Keeping in mind these were on.

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Speaker 5: Average targets, there's not really a penalty if you were

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Speaker 5: to miss it. However, some agencies have further savings. Now.

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Speaker 5: A few days before the budget, I revealed an internal

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Speaker 5: document that stated that some agencies were expecting and I

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Speaker 5: quote three to five years of financial sustainability. Now that

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Speaker 5: has come true as of the budget. It estimates a

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Speaker 5: further one billion dollars in quote further savings and revenue measures.

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Speaker 3: Is to be needed per year.

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Speaker 5: Now that's through to the twenty twenty seven to twenty

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Speaker 5: eight financial year, so we'll have a lot more May

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Speaker 5: thirtieth or whenever the next budget day is to see

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Speaker 5: what else happens. Some agencies are seeing savings be reinvested

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Speaker 5: or retained to support the frontline. One of those is

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Speaker 5: the Department of Corrections. It was given a savings target

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Speaker 5: of six point five percent, essentially meaning one hundred and

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Speaker 5: eight point six million, and it found one hundred and

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Speaker 5: ten point five million of savings, which is all going

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Speaker 5: back into the department for its front line. Now, a

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Speaker 5: lot of other agencies had found multiple million dollars worth

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Speaker 5: of savings. Some agencies, including the GCSB, exempt from cuts

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Speaker 5: but had actually found savings instead. And another thing that

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Speaker 5: we're looking at beyond the budget. This is quite an

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Speaker 5: interesting part of it, is that agencies have to look

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Speaker 5: beyond May thirtieth, and some of these have to find

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Speaker 5: more cuts and more savings. Ministry for the Environment, for instance,

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Speaker 5: has to find forty four point four million dollars worth

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Speaker 5: of further savings. Big ones at the Ministry of Business,

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Speaker 5: Innovation and Employment mb which is deemed a mega ministry

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Speaker 5: by some now it was given a savings target of

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Speaker 5: seven point five percent, meaning roughly two hundred and thirty

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Speaker 5: three million, and it's signaling two hundred and fifty four

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Speaker 5: million in further savings, so that's actually higher than what

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Speaker 5: it had cut at that point as of the budget,

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Speaker 5: which confirmed what was on the line.

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Speaker 3: Now.

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Speaker 5: Essentially what we're seeing is some reprioritization those agencies that

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Speaker 5: are deemed front line. I suppose the Ministry of Health

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Speaker 5: also reprioritizing savings. OTTO Otamadiki also putting those savings back

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Speaker 5: into supporting the front line. Now there are other proposals

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Speaker 5: that also somewhat align with the budget and the public sector.

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Speaker 5: There's this talk about five hundred new police officers as well,

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Speaker 5: which we'll be keeping an eye on.

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Speaker 2: In all, how many jobs have been cut or thereabouts

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Speaker 2: thus far?

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Speaker 5: Yeah, so the tallly is around four thousand dish. I

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Speaker 5: mean some of these proposals, some of these confirmed, and

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Speaker 5: some of the tallies are roles that have been essentially

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Speaker 5: cut because government work programs have been cut from the

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Speaker 5: new government, so things such as people working in three

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Speaker 5: waters are no longer having those roles. But in terms

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Speaker 5: of the cost savings there, we're definitely in the thousands.

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Speaker 5: And it seems like we're not off the hook yet

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Speaker 5: in terms of what's on the line.

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Speaker 4: So we're told these cuts would only be to back

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Speaker 4: office roles, and yet we're seeing that there's hiring freeze

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Speaker 4: in public hospitals, that costs have been cut out of

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Speaker 4: school lunches, that disability services have been rolled back, and

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Speaker 4: more than four thousand people have lost their jobs, half

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Speaker 4: of them in Wellington.

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Speaker 2: Why was the Foreign Affairs Ministry exempt from the cats.

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Speaker 5: Yeah, so this was a really interesting one, a good

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Speaker 5: scoop from The Herald's deputy political editor there. So the

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Speaker 5: Foreign Minister Winston Peters, essentially gave m FAT a savings

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Speaker 5: target of one percent. Now, going back to what we

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Speaker 5: were talking about before, other agencies had a saving target

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Speaker 5: of six point five to seven point five percent, but

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Speaker 5: the Ministry of Foreign Affairs only had to find one. Essentially,

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Speaker 5: it was in line to contribute thirty five point one

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Speaker 5: one million dollars to the savings, but Winston Peter's office,

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Speaker 5: who is the Minister of Foreign Affairs, he confirmed the

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Speaker 5: cuts were scrapped and they were looking at smaller cuts. Now,

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Speaker 5: this is quite an interesting one.

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Speaker 3: Obviously.

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Speaker 5: The Ministry of Foreign Affairs and Trades budget in terms

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Speaker 5: of the budget books, is being described by Peters as balanced.

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Speaker 5: He's calling it a modest cut as well. So that

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Speaker 5: is quite an interesting one in terms of what's been

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Speaker 5: exempt from the cutting exercise as well.

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Speaker 3: Previously noted the GCSB was also.

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Speaker 5: Exempt from cuts, but it had actually, according to the

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Speaker 5: budget documents, found seven point six million dollars worth of savings.

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Speaker 5: So those savings are still being found even by agencies

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Speaker 5: that didn't have to do them.

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Speaker 1: Health Ministry staff have been firing back at.

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Speaker 2: The idea of a pay freeze. You've seen some internal

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Speaker 2: documents from the ministry. Hey, what's the situation there.

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Speaker 5: Yeah, so this is another interesting one. Now, these agencies

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Speaker 5: have put forward a lot of different proposals in terms

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Speaker 5: of how they actually meet these savings targets, and the

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Speaker 5: Ministry of Health, which has quite a lot of employees,

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Speaker 5: has put forward a proposal. At the time, it was

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Speaker 5: a proposal to not apply pay increases for people above

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Speaker 5: a sort of met range salary and that would propose

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Speaker 5: to start this year. Now, workers were opposing the plans

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Speaker 5: in the feedback which has been revealed from documents leaked

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Speaker 5: from the Ministry of Health, and essentially the feedback was,

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Speaker 5: I suppose so dire that it prompted a change of

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Speaker 5: heart from the ministry itself. The feedback, which can be

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Speaker 5: revealed in those documents, workers were saying it created feelings

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Speaker 5: of being undervalued, potentially marginalized. To others said it was demoralizing,

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Speaker 5: some calling it tone deaf. With the current economic environment,

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Speaker 5: obviously a lot of struggles in the economy right now,

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Speaker 5: the cost of living still a major topic for a

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Speaker 5: lot of people.

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Speaker 3: It was also suggested.

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Speaker 5: That people on higher incomes and bigger salaries could essentially

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Speaker 5: go without, and it was also ideas around the Health

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Speaker 5: Ministry were floated around working fewer hours on the same

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Speaker 5: pay and then adding more leave. They also looked at

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Speaker 5: the idea of freezing vacancies.

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Speaker 3: But essentially this idea.

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Speaker 5: Of a pay freeze was opposed so much by these

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Speaker 5: staff in these documents that the agency had to do

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Speaker 5: a U turn. Now all of these agencies have to

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Speaker 5: do consultation on the cuts. They have to speak with

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Speaker 5: their staff about what's going on. It is part of

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Speaker 5: their agreements. And in terms of this, there was a

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Speaker 5: really significant amount of feedback. So the Ministry changed its

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Speaker 5: mind from that pay freeze proposal and it instead made

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Speaker 5: it so that people in sort of lower to mid

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Speaker 5: range salary bans would get a one off payment and

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Speaker 5: then people on those higher salary bans, as we say,

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Speaker 5: could go without.

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Speaker 3: Well, they are going without. Now.

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Speaker 5: These increases, these pay rises will take place after talks

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Speaker 5: with staff in September. The payments themselves will be made

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Speaker 5: in October and backdated to July. Now July is a

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Speaker 5: pretty significant date in terms of the public sector. We'd

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Speaker 5: been talking before about May thirtieth budget day, but now

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Speaker 5: July the first is the big one that we're all

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Speaker 5: looking to as well. In the Ministry of Health, it's

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Speaker 5: been a pretty controversial one with changes to the Suicide

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Speaker 5: Prevention Office, a back and forth between the Ministry of

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Speaker 5: Mental Health Matt do you see there the agency as

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Speaker 5: well as looking at leasing further flaw space on its

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Speaker 5: offices in Central Wellington. So that's an idea being floated

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Speaker 5: by some other agencies as well, including the Health Ministry.

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Speaker 5: And a quote from this document as well, which is

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Speaker 5: quite interesting and not something that all of the agencies

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Speaker 5: have said, is and I quote, we're not expecting to

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Speaker 5: need to make further personnel reductions based on the current

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Speaker 5: fiscal settings. So that implies that what we've got on

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Speaker 5: the table now at the Ministry of Health, in terms

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Speaker 5: of those roughly one hundred and thirty four job cuts,

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Speaker 5: I believe might be the end of it. Now that

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Speaker 5: may not be the case for everyone.

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Speaker 2: With all these jobs comes redundancy payouts, hey, and they're

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Speaker 2: starting to rise already in the tens of millions.

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Speaker 6: So I think one of the questions that people are

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Speaker 6: going to be asking themselves in the public sector and

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Speaker 6: among ministers, is how much would the government want to

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Speaker 6: spend on redundancy payouts? Most people don't think that's a

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Speaker 6: very good use of public month.

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Speaker 2: What is the suit situation with having to pay for

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Speaker 2: staff being laid off at the moment.

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Speaker 5: Yeah, So those numbers are just coming out. Obviously, these

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Speaker 5: proposals had been on the line for some time. Some

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Speaker 5: of these agencies are working to different schedules, different time frames,

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Speaker 5: so these redundancy payouts are only just really being known now.

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Speaker 5: And what we're seeing is a few of those have

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Speaker 5: been revealed. One of them, notably MEGA Ministry, the Ministry

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Speaker 5: of Business, Innovation and Employment and its total cost of

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Speaker 5: staff redundancies was more than eight million dollars as of

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Speaker 5: May thirtieth, so that was when that budget was unveiled.

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Speaker 5: The Economic Development ministimilusly revealed the numbers to Labour's EI

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Speaker 5: Shaviril and a written parliamentary question which is publicly available

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Speaker 5: to view. I took a look at it and found

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Speaker 5: some other numbers as well. The redundancies at the New

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Speaker 5: Zealand Customs Service totaling two point six million, nearly two

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Speaker 5: point seven. In terms of those numbers. There, Customs planning

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Speaker 5: on concluding its change process soon, a lot of agencies

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Speaker 5: looking to that first of July. Now, some people may

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Speaker 5: assume custom savings would be reinvested. I suppose gives a

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Speaker 5: similar vibe as police and corrections. Custom savings will not

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Speaker 5: be reinvested to the front line, which is an interesting

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Speaker 5: take there. And now Customs redundancy cost is estimated to

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Speaker 5: be around two point nine million dollars in total. So yeah,

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Speaker 5: nearly three million dollars from Customs, about eight million from

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Speaker 5: MB so we're looking in the double digits just for

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Speaker 5: two of these.

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Speaker 3: We've also got some.

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Speaker 5: Numbers from the Ministry for the Environment as well. The

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Speaker 5: Ministry for the Environment in the millions as well. In

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Speaker 5: terms of those payouts so far one point five million,

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Speaker 5: but that's as of May thirtieth.

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Speaker 3: It's changed.

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Speaker 5: Proposals still ongoing. Voluntary redundancy open for quite some time now.

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Speaker 5: We are as open till August sixteenth. So in terms

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Speaker 5: of these payouts at the Environment Ministry, one point five

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Speaker 5: million dollars as of May thirtieth. Will it be more,

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Speaker 5: We'll have to wait and see. But staff have until

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Speaker 5: August to apply for voluntary redundancy, so it definitely could

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Speaker 5: be more. Now this is just three agencies of many

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Speaker 5: many more so in terms of these redundancy payouts, we'll

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Speaker 5: have to wait and see, but it does look as

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Speaker 5: if it's going to be in the tens of millions,

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Speaker 5: if not more than that, in terms of the payouts

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Speaker 5: to these staff. Now, it's also interesting the payouts to

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Speaker 5: the Ministry of Business, Innovation and Employment don't actually include

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Speaker 5: sort of everything. So it doesn't include the final fortnightly

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Speaker 5: payment and you'll leave. It doesn't include time and lou

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Speaker 5: or any other payments that people might be entitled to,

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Speaker 5: so it's just straight redundancy. So I guess in terms

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Speaker 5: of the payments to staff have been laid off, probably

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Speaker 5: more than that. At the Ministry of Business, Innovation and Employment.

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Speaker 2: Last week was scrutiny week at Parliament. Nicola Willis has

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Speaker 2: confirmed the government intends to have performance based pay rises

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Speaker 2: for public service CEOs. The latest advice to I've received

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Speaker 2: is that public service leaders on average receive a pay

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Speaker 2: at a rate of around fifty to sixty percent of

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Speaker 2: their private sector counterpart. The policy has been called a

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Speaker 2: bit tone deaf by labor as it comes as obviously

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Speaker 2: thousands of public servants are being laid off.

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Speaker 1: What do people you've spoken to think about it?

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Speaker 5: Yeah, so it's a bit of a controversial one. I mean,

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Speaker 5: people on the political left are sort of slamming the proposals,

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Speaker 5: essentially suggesting that it's not really fair with all of

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Speaker 5: these people being laid off, I mean, why should those

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Speaker 5: at the top on the highest salaries be getting an increase.

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Speaker 5: But the Finance Minister and Public Service Minister to Nichola

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Speaker 5: Willis is essentially selling it by saying that this will

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Speaker 5: get results. It's also worth noting I suppose that some

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Speaker 5: agencies and some people at the top have been under

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Speaker 5: a remuneration freeze, not having any increases in their pay

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Speaker 5: for quite some time as well. But yeah, in terms

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Speaker 5: of performance is quite an interesting topic.

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Speaker 3: There. Kind of reminds me as well.

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Speaker 5: During the election, people were talking about performance pay for teachers,

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Speaker 5: would that bring better results? Obviously a lot of back

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Speaker 5: and forth about whether or not that's actually a good policy.

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Speaker 5: Niicola Willis saying it it likely won't come into force

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Speaker 5: for the next twelve months or so, so it might

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Speaker 5: come into force once the public sector has kind of

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Speaker 5: cooled down a bit in terms of all of these

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Speaker 5: ongoing job cuts, and it's maybe in a I guess

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Speaker 5: a more chilled out state.

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Speaker 3: We'll have to wait and see for that.

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Speaker 1: And Asarah, finally, you're based in Wellington.

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Speaker 2: What sort of impact all these job cuts having on

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Speaker 2: the city itself.

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Speaker 5: Yeah, it's actually really interesting to see. I suppose how

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Speaker 5: much of an impact this is having. Seems to be

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Speaker 5: a lot of what people are talking about now. I

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Speaker 5: live nearby Central Wellington and I've been walking around places

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Speaker 5: like the Terrace Lampton Key, and I overhear people having

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Speaker 5: conversations about these cuts, and I try not to listen in,

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Speaker 5: but yeah, I mean I overhear people having chats about

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Speaker 5: what's going on. A lot of people in Wellington also

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Speaker 5: know people who are public servants, know people who might

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Speaker 5: be impacted.

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Speaker 3: By this as well.

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Speaker 5: Now, a number of house price reports have said this

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Speaker 5: has an impact on housing. It's also apparently having an

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Speaker 5: impact on retail spending. We've heard some recent news that

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Speaker 5: there are quite a few empty storefronts around sort of

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Speaker 5: Willis Street, Lampton Key, Central Wellington. I mean this is

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Speaker 5: prime retail area. This is places where people want to go,

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Speaker 5: want to spend money, and want to set up shop apparently,

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Speaker 5: but it seems like that's not as much of the

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Speaker 5: case anymore. It seems like there's a reduction in spending

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Speaker 5: in terms of those nice to haves. We'll just have

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Speaker 5: to wait and see. In terms of the total impact,

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Speaker 5: obviously a lot more as still going on now. Agencies

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Speaker 5: are looking at implementing a lot of their change proposals

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Speaker 5: and plans as of the first of July, the start

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Speaker 5: of the political financial year, So in terms of the

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Speaker 5: total impact we might see more sepen as of July first,

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Speaker 5: In terms of the impact to retail spending, house prices,

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Speaker 5: and I guess just the overall mood of Wellington, which

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Speaker 5: you could argue has perhaps fallen. I mean, there's been

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Speaker 5: issues of water, there's been issues of quake, strengthening buildings,

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Speaker 5: a quite expensive budget, so yeah, there's quite a lot

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Speaker 5: going on in the city. And in terms of the

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Speaker 5: retail sector obviously hasn't been under a good period for

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Speaker 5: quite some time, so I can't imagine this will be

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Speaker 5: helping it. Essentially, the government and the Finance Minister are

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Speaker 5: trying to put in a sort of vibe of fiscal

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Speaker 5: scrutiny and this responsible spending across the sector that will

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Speaker 5: go on for multiple years in terms of getting those

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Speaker 5: results for people.

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Speaker 1: Thanks for joining us Azariah. That's it for this episode

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Speaker 1: of the Front Page.

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Speaker 2: You can read more about today's stories and extensive news

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Speaker 2: coverage at nzed Herald dot co dot nz. The Front

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Speaker 2: Page is produced by Ethan Siles with sound engineer Patty Fox.

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Speaker 1: I'm Chelsea Daniels.

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Speaker 2: Subscribe to the Front Page on iHeartRadio or wherever you

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Speaker 2: behind the headlines.