Speaker 1: Kyoda.
Speaker 2: I'm Chelsea Daniels and this is the Front Page, a
Speaker 2: daily podcast presented by the New Zealand Herald. Thousands of
Speaker 2: jobs have gone, millions of dollars have been spent on
Speaker 2: redundancy payouts, and it's not over yet. As the public
Speaker 2: sector continues to tighten its belt. Budget twenty twenty four
Speaker 2: sets a target for one point five billion dollars worth of.
Speaker 1: Cost savings, with estimates for.
Speaker 2: One billion dollars in further savings over numerous financial years.
Speaker 2: But as the axe falls, there are questions over whether
Speaker 2: the cuts will hit the front line, something the government's
Speaker 2: promised will stay intact. Today on the front page, Newstalk
Speaker 2: ZB reporter Azariah Howell joins us for an update on
Speaker 2: whether changes have stayed in the back room and how
Speaker 2: many more jobs are at risk. Azariah, what did Budget
Speaker 2: twenty twenty four reveal about the extent of public service
Speaker 2: cuts so far?
Speaker 3: Yeah?
Speaker 4: So.
Speaker 5: It was Nikola Willis's first budget as Finance Minister and
Speaker 5: a lot of these agencies had been essentially counting down
Speaker 5: to this day where cost savings could be revealed. The
Speaker 5: government had previously signaled before the budget was released that
Speaker 5: it was one for the front line. Now that word
Speaker 5: has been used back and forth in terms of the
Speaker 5: public sector and the public service agencies have been chasing
Speaker 5: down these cost savings. They've got these targets of six
Speaker 5: point five to seven point five percent and all would
Speaker 5: be revealed May thirtieth on that big budget day.
Speaker 3: Now, before budget Day, there were.
Speaker 5: Thousands of rolls on the line proposals, but the budget
Speaker 5: really confirmed what had been ticked off and what had
Speaker 5: been missed, what agencies did, how many jobs were on
Speaker 5: the line, and things like that. So departments were essentially
Speaker 5: asked to identify savings options and these were essentially prioritized
Speaker 5: to be on low value programs or programs that don't
Speaker 5: align to the government's policy objectives and also what it
Speaker 5: deems back office functions. Now, contractors and consultants have also
Speaker 5: been on the line quite a bit, and it has
Speaker 5: been a bit of a controversy recently as some agencies
Speaker 5: have had to hire contractors and consultants to deliver their
Speaker 5: job cut proposals, which has been a bit of a
Speaker 5: tricky one. I suppose the government had a target of
Speaker 5: finding one point five billion dollars worth of savings, so
Speaker 5: quite a chunk of cash there across the public sector,
Speaker 5: and it's something that was achieved according to the budget.
Speaker 5: So if we crunched the numbers, some of the agencies
Speaker 5: went above their targets, some of them fell short.
Speaker 3: Keeping in mind these were on.
Speaker 5: Average targets, there's not really a penalty if you were
Speaker 5: to miss it. However, some agencies have further savings. Now.
Speaker 5: A few days before the budget, I revealed an internal
Speaker 5: document that stated that some agencies were expecting and I
Speaker 5: quote three to five years of financial sustainability. Now that
Speaker 5: has come true as of the budget. It estimates a
Speaker 5: further one billion dollars in quote further savings and revenue measures.
Speaker 3: Is to be needed per year.
Speaker 5: Now that's through to the twenty twenty seven to twenty
Speaker 5: eight financial year, so we'll have a lot more May
Speaker 5: thirtieth or whenever the next budget day is to see
Speaker 5: what else happens. Some agencies are seeing savings be reinvested
Speaker 5: or retained to support the frontline. One of those is
Speaker 5: the Department of Corrections. It was given a savings target
Speaker 5: of six point five percent, essentially meaning one hundred and
Speaker 5: eight point six million, and it found one hundred and
Speaker 5: ten point five million of savings, which is all going
Speaker 5: back into the department for its front line. Now, a
Speaker 5: lot of other agencies had found multiple million dollars worth
Speaker 5: of savings. Some agencies, including the GCSB, exempt from cuts
Speaker 5: but had actually found savings instead. And another thing that
Speaker 5: we're looking at beyond the budget. This is quite an
Speaker 5: interesting part of it, is that agencies have to look
Speaker 5: beyond May thirtieth, and some of these have to find
Speaker 5: more cuts and more savings. Ministry for the Environment, for instance,
Speaker 5: has to find forty four point four million dollars worth
Speaker 5: of further savings. Big ones at the Ministry of Business,
Speaker 5: Innovation and Employment mb which is deemed a mega ministry
Speaker 5: by some now it was given a savings target of
Speaker 5: seven point five percent, meaning roughly two hundred and thirty
Speaker 5: three million, and it's signaling two hundred and fifty four
Speaker 5: million in further savings, so that's actually higher than what
Speaker 5: it had cut at that point as of the budget,
Speaker 5: which confirmed what was on the line.
Speaker 3: Now.
Speaker 5: Essentially what we're seeing is some reprioritization those agencies that
Speaker 5: are deemed front line. I suppose the Ministry of Health
Speaker 5: also reprioritizing savings. OTTO Otamadiki also putting those savings back
Speaker 5: into supporting the front line. Now there are other proposals
Speaker 5: that also somewhat align with the budget and the public sector.
Speaker 5: There's this talk about five hundred new police officers as well,
Speaker 5: which we'll be keeping an eye on.
Speaker 2: In all, how many jobs have been cut or thereabouts
Speaker 2: thus far?
Speaker 5: Yeah, so the tallly is around four thousand dish. I
Speaker 5: mean some of these proposals, some of these confirmed, and
Speaker 5: some of the tallies are roles that have been essentially
Speaker 5: cut because government work programs have been cut from the
Speaker 5: new government, so things such as people working in three
Speaker 5: waters are no longer having those roles. But in terms
Speaker 5: of the cost savings there, we're definitely in the thousands.
Speaker 5: And it seems like we're not off the hook yet
Speaker 5: in terms of what's on the line.
Speaker 4: So we're told these cuts would only be to back
Speaker 4: office roles, and yet we're seeing that there's hiring freeze
Speaker 4: in public hospitals, that costs have been cut out of
Speaker 4: school lunches, that disability services have been rolled back, and
Speaker 4: more than four thousand people have lost their jobs, half
Speaker 4: of them in Wellington.
Speaker 2: Why was the Foreign Affairs Ministry exempt from the cats.
Speaker 5: Yeah, so this was a really interesting one, a good
Speaker 5: scoop from The Herald's deputy political editor there. So the
Speaker 5: Foreign Minister Winston Peters, essentially gave m FAT a savings
Speaker 5: target of one percent. Now, going back to what we
Speaker 5: were talking about before, other agencies had a saving target
Speaker 5: of six point five to seven point five percent, but
Speaker 5: the Ministry of Foreign Affairs only had to find one. Essentially,
Speaker 5: it was in line to contribute thirty five point one
Speaker 5: one million dollars to the savings, but Winston Peter's office,
Speaker 5: who is the Minister of Foreign Affairs, he confirmed the
Speaker 5: cuts were scrapped and they were looking at smaller cuts. Now,
Speaker 5: this is quite an interesting one.
Speaker 3: Obviously.
Speaker 5: The Ministry of Foreign Affairs and Trades budget in terms
Speaker 5: of the budget books, is being described by Peters as balanced.
Speaker 5: He's calling it a modest cut as well. So that
Speaker 5: is quite an interesting one in terms of what's been
Speaker 5: exempt from the cutting exercise as well.
Speaker 3: Previously noted the GCSB was also.
Speaker 5: Exempt from cuts, but it had actually, according to the
Speaker 5: budget documents, found seven point six million dollars worth of savings.
Speaker 5: So those savings are still being found even by agencies
Speaker 5: that didn't have to do them.
Speaker 1: Health Ministry staff have been firing back at.
Speaker 2: The idea of a pay freeze. You've seen some internal
Speaker 2: documents from the ministry. Hey, what's the situation there.
Speaker 5: Yeah, so this is another interesting one. Now, these agencies
Speaker 5: have put forward a lot of different proposals in terms
Speaker 5: of how they actually meet these savings targets, and the
Speaker 5: Ministry of Health, which has quite a lot of employees,
Speaker 5: has put forward a proposal. At the time, it was
Speaker 5: a proposal to not apply pay increases for people above
Speaker 5: a sort of met range salary and that would propose
Speaker 5: to start this year. Now, workers were opposing the plans
Speaker 5: in the feedback which has been revealed from documents leaked
Speaker 5: from the Ministry of Health, and essentially the feedback was,
Speaker 5: I suppose so dire that it prompted a change of
Speaker 5: heart from the ministry itself. The feedback, which can be
Speaker 5: revealed in those documents, workers were saying it created feelings
Speaker 5: of being undervalued, potentially marginalized. To others said it was demoralizing,
Speaker 5: some calling it tone deaf. With the current economic environment,
Speaker 5: obviously a lot of struggles in the economy right now,
Speaker 5: the cost of living still a major topic for a
Speaker 5: lot of people.
Speaker 3: It was also suggested.
Speaker 5: That people on higher incomes and bigger salaries could essentially
Speaker 5: go without, and it was also ideas around the Health
Speaker 5: Ministry were floated around working fewer hours on the same
Speaker 5: pay and then adding more leave. They also looked at
Speaker 5: the idea of freezing vacancies.
Speaker 3: But essentially this idea.
Speaker 5: Of a pay freeze was opposed so much by these
Speaker 5: staff in these documents that the agency had to do
Speaker 5: a U turn. Now all of these agencies have to
Speaker 5: do consultation on the cuts. They have to speak with
Speaker 5: their staff about what's going on. It is part of
Speaker 5: their agreements. And in terms of this, there was a
Speaker 5: really significant amount of feedback. So the Ministry changed its
Speaker 5: mind from that pay freeze proposal and it instead made
Speaker 5: it so that people in sort of lower to mid
Speaker 5: range salary bans would get a one off payment and
Speaker 5: then people on those higher salary bans, as we say,
Speaker 5: could go without.
Speaker 3: Well, they are going without. Now.
Speaker 5: These increases, these pay rises will take place after talks
Speaker 5: with staff in September. The payments themselves will be made
Speaker 5: in October and backdated to July. Now July is a
Speaker 5: pretty significant date in terms of the public sector. We'd
Speaker 5: been talking before about May thirtieth budget day, but now
Speaker 5: July the first is the big one that we're all
Speaker 5: looking to as well. In the Ministry of Health, it's
Speaker 5: been a pretty controversial one with changes to the Suicide
Speaker 5: Prevention Office, a back and forth between the Ministry of
Speaker 5: Mental Health Matt do you see there the agency as
Speaker 5: well as looking at leasing further flaw space on its
Speaker 5: offices in Central Wellington. So that's an idea being floated
Speaker 5: by some other agencies as well, including the Health Ministry.
Speaker 5: And a quote from this document as well, which is
Speaker 5: quite interesting and not something that all of the agencies
Speaker 5: have said, is and I quote, we're not expecting to
Speaker 5: need to make further personnel reductions based on the current
Speaker 5: fiscal settings. So that implies that what we've got on
Speaker 5: the table now at the Ministry of Health, in terms
Speaker 5: of those roughly one hundred and thirty four job cuts,
Speaker 5: I believe might be the end of it. Now that
Speaker 5: may not be the case for everyone.
Speaker 2: With all these jobs comes redundancy payouts, hey, and they're
Speaker 2: starting to rise already in the tens of millions.
Speaker 6: So I think one of the questions that people are
Speaker 6: going to be asking themselves in the public sector and
Speaker 6: among ministers, is how much would the government want to
Speaker 6: spend on redundancy payouts? Most people don't think that's a
Speaker 6: very good use of public month.
Speaker 2: What is the suit situation with having to pay for
Speaker 2: staff being laid off at the moment.
Speaker 5: Yeah, So those numbers are just coming out. Obviously, these
Speaker 5: proposals had been on the line for some time. Some
Speaker 5: of these agencies are working to different schedules, different time frames,
Speaker 5: so these redundancy payouts are only just really being known now.
Speaker 5: And what we're seeing is a few of those have
Speaker 5: been revealed. One of them, notably MEGA Ministry, the Ministry
Speaker 5: of Business, Innovation and Employment and its total cost of
Speaker 5: staff redundancies was more than eight million dollars as of
Speaker 5: May thirtieth, so that was when that budget was unveiled.
Speaker 5: The Economic Development ministimilusly revealed the numbers to Labour's EI
Speaker 5: Shaviril and a written parliamentary question which is publicly available
Speaker 5: to view. I took a look at it and found
Speaker 5: some other numbers as well. The redundancies at the New
Speaker 5: Zealand Customs Service totaling two point six million, nearly two
Speaker 5: point seven. In terms of those numbers. There, Customs planning
Speaker 5: on concluding its change process soon, a lot of agencies
Speaker 5: looking to that first of July. Now, some people may
Speaker 5: assume custom savings would be reinvested. I suppose gives a
Speaker 5: similar vibe as police and corrections. Custom savings will not
Speaker 5: be reinvested to the front line, which is an interesting
Speaker 5: take there. And now Customs redundancy cost is estimated to
Speaker 5: be around two point nine million dollars in total. So yeah,
Speaker 5: nearly three million dollars from Customs, about eight million from
Speaker 5: MB so we're looking in the double digits just for
Speaker 5: two of these.
Speaker 3: We've also got some.
Speaker 5: Numbers from the Ministry for the Environment as well. The
Speaker 5: Ministry for the Environment in the millions as well. In
Speaker 5: terms of those payouts so far one point five million,
Speaker 5: but that's as of May thirtieth.
Speaker 3: It's changed.
Speaker 5: Proposals still ongoing. Voluntary redundancy open for quite some time now.
Speaker 5: We are as open till August sixteenth. So in terms
Speaker 5: of these payouts at the Environment Ministry, one point five
Speaker 5: million dollars as of May thirtieth. Will it be more,
Speaker 5: We'll have to wait and see. But staff have until
Speaker 5: August to apply for voluntary redundancy, so it definitely could
Speaker 5: be more. Now this is just three agencies of many
Speaker 5: many more so in terms of these redundancy payouts, we'll
Speaker 5: have to wait and see, but it does look as
Speaker 5: if it's going to be in the tens of millions,
Speaker 5: if not more than that, in terms of the payouts
Speaker 5: to these staff. Now, it's also interesting the payouts to
Speaker 5: the Ministry of Business, Innovation and Employment don't actually include
Speaker 5: sort of everything. So it doesn't include the final fortnightly
Speaker 5: payment and you'll leave. It doesn't include time and lou
Speaker 5: or any other payments that people might be entitled to,
Speaker 5: so it's just straight redundancy. So I guess in terms
Speaker 5: of the payments to staff have been laid off, probably
Speaker 5: more than that. At the Ministry of Business, Innovation and Employment.
Speaker 2: Last week was scrutiny week at Parliament. Nicola Willis has
Speaker 2: confirmed the government intends to have performance based pay rises
Speaker 2: for public service CEOs. The latest advice to I've received
Speaker 2: is that public service leaders on average receive a pay
Speaker 2: at a rate of around fifty to sixty percent of
Speaker 2: their private sector counterpart. The policy has been called a
Speaker 2: bit tone deaf by labor as it comes as obviously
Speaker 2: thousands of public servants are being laid off.
Speaker 1: What do people you've spoken to think about it?
Speaker 5: Yeah, so it's a bit of a controversial one. I mean,
Speaker 5: people on the political left are sort of slamming the proposals,
Speaker 5: essentially suggesting that it's not really fair with all of
Speaker 5: these people being laid off, I mean, why should those
Speaker 5: at the top on the highest salaries be getting an increase.
Speaker 5: But the Finance Minister and Public Service Minister to Nichola
Speaker 5: Willis is essentially selling it by saying that this will
Speaker 5: get results. It's also worth noting I suppose that some
Speaker 5: agencies and some people at the top have been under
Speaker 5: a remuneration freeze, not having any increases in their pay
Speaker 5: for quite some time as well. But yeah, in terms
Speaker 5: of performance is quite an interesting topic.
Speaker 3: There. Kind of reminds me as well.
Speaker 5: During the election, people were talking about performance pay for teachers,
Speaker 5: would that bring better results? Obviously a lot of back
Speaker 5: and forth about whether or not that's actually a good policy.
Speaker 5: Niicola Willis saying it it likely won't come into force
Speaker 5: for the next twelve months or so, so it might
Speaker 5: come into force once the public sector has kind of
Speaker 5: cooled down a bit in terms of all of these
Speaker 5: ongoing job cuts, and it's maybe in a I guess
Speaker 5: a more chilled out state.
Speaker 3: We'll have to wait and see for that.
Speaker 1: And Asarah, finally, you're based in Wellington.
Speaker 2: What sort of impact all these job cuts having on
Speaker 2: the city itself.
Speaker 5: Yeah, it's actually really interesting to see. I suppose how
Speaker 5: much of an impact this is having. Seems to be
Speaker 5: a lot of what people are talking about now. I
Speaker 5: live nearby Central Wellington and I've been walking around places
Speaker 5: like the Terrace Lampton Key, and I overhear people having
Speaker 5: conversations about these cuts, and I try not to listen in,
Speaker 5: but yeah, I mean I overhear people having chats about
Speaker 5: what's going on. A lot of people in Wellington also
Speaker 5: know people who are public servants, know people who might
Speaker 5: be impacted.
Speaker 3: By this as well.
Speaker 5: Now, a number of house price reports have said this
Speaker 5: has an impact on housing. It's also apparently having an
Speaker 5: impact on retail spending. We've heard some recent news that
Speaker 5: there are quite a few empty storefronts around sort of
Speaker 5: Willis Street, Lampton Key, Central Wellington. I mean this is
Speaker 5: prime retail area. This is places where people want to go,
Speaker 5: want to spend money, and want to set up shop apparently,
Speaker 5: but it seems like that's not as much of the
Speaker 5: case anymore. It seems like there's a reduction in spending
Speaker 5: in terms of those nice to haves. We'll just have
Speaker 5: to wait and see. In terms of the total impact,
Speaker 5: obviously a lot more as still going on now. Agencies
Speaker 5: are looking at implementing a lot of their change proposals
Speaker 5: and plans as of the first of July, the start
Speaker 5: of the political financial year, So in terms of the
Speaker 5: total impact we might see more sepen as of July first,
Speaker 5: In terms of the impact to retail spending, house prices,
Speaker 5: and I guess just the overall mood of Wellington, which
Speaker 5: you could argue has perhaps fallen. I mean, there's been
Speaker 5: issues of water, there's been issues of quake, strengthening buildings,
Speaker 5: a quite expensive budget, so yeah, there's quite a lot
Speaker 5: going on in the city. And in terms of the
Speaker 5: retail sector obviously hasn't been under a good period for
Speaker 5: quite some time, so I can't imagine this will be
Speaker 5: helping it. Essentially, the government and the Finance Minister are
Speaker 5: trying to put in a sort of vibe of fiscal
Speaker 5: scrutiny and this responsible spending across the sector that will
Speaker 5: go on for multiple years in terms of getting those
Speaker 5: results for people.
Speaker 1: Thanks for joining us Azariah. That's it for this episode
Speaker 1: of the Front Page.
Speaker 2: You can read more about today's stories and extensive news
Speaker 2: coverage at nzed Herald dot co dot nz. The Front
Speaker 2: Page is produced by Ethan Siles with sound engineer Patty Fox.
Speaker 1: I'm Chelsea Daniels.
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