The opposition and the public service union have accused the National-led Government of attacking frontline services with its plan to lose nearly 9000 jobs.
But coalition partner ACT and lobby group the Taxpayers' Union said the Government was pulling its punches — and that thousands more roles should be axed.
Reports of the potential Budget cuts emerged in the past several days, with union and political reaction streaming in throughout the course of the morning before Finance Minister Nicola Willis delivered her announcement to a business audience in Auckland.
The Government announced today that the core public service would be reduced to an "in-principle target" of about 55,000 staff by mid-2029, down from the current 63,600 — a loss of around 8700 full-time equivalent roles.
Willis: Hiring spree under Labour 'exploded' headcount
Nicola Willis framed the changes as a response to what she described as a hiring spree under the previous Labour government, saying the number of public servants had "exploded" from 47,250 to 65,700 between 2017 and 2023.
"Most of the growth occurred in the back-office, with ballooning costs for policy analysts and consultancy invoices, rather than for frontline positions," she said in her speech announcing the changes this afternoon.
Willis said the overhaul, which includes major agency mergers, budget cuts and accelerated use of AI and digital tools, would save $2.4 billion over the forecast period.
"Those savings will now be deployed to better purposes — to delivering more services in our health system, to increasing educational resources for our schools, to building infrastructure and strengthening our defence force and police," she said.
Prime Minister Christopher Luxon and Education Minister Erica Stanford have made a pre-Budget announcement on new support for maths, reading and writing learning. (Source: 1News)
She pointed to New Zealand's 39 departments and ministries administering budget lines, compared with 16 in Australia, 24 in the United Kingdom and about 12 in Finland.
'Cuts will be felt in every community' - Labour
Labour leader Chris Hipkins said the coalition wanted people to believe the cuts were in the name of "efficiency", but argued they were really a choice "to blow the budget on tax cuts for tobacco companies and property speculators, and make Kiwis pay for it".
"Christopher Luxon and Nicola Willis cannot cut thousands of public servants and not touch frontline services. It simply isn't possible," Hipkins said this morning.
"Nicola Willis' latest cuts will be felt in every community. Longer waits. People missing out. New Zealand can’t afford another three years of this."
Reacting after the announcement, Public Service Association (PSA) national secretary Duane Leo called the plan "an act of wilful destruction", saying "all New Zealanders will pay a price for this reckless plan in fewer services they rely on".
"The Government claims savings of $2.4 billion - that's money gone from services, simple as that. Less means less. Lower quality, slower and fewer services," he said.
"These cuts will be cruel and deep and felt across the nation."
Leo criticised the Government's plan to link AI adoption to headcount reduction, saying it "turns technology into a threat rather than a tool", and called proposed department mergers "a recipe for more chaos".
He challenged the Government to tell voters before the election which services would be cut. "If the Government is so confident this is the right path, it should tell voters exactly what it means for them. Show us the evidence," he said.
Willis said in her speech that the cuts do not apply to teachers, doctors, nurses, police or defence personnel. "We fully expect that with good budgeting we will be hiring more nurses, police officers and others in critical frontline roles," she said.
Stats NZ releases unemployment data for the March 2026 quarter. (Source: 1News)
'DOGE-style libertarian fantasies' - Greens
Earlier this morning, Labour public service spokesperson Camilla Belich said cuts will push up unemployment. She released a statement this morning before the speech.
Belich said: "At a time when families are already under pressure, Nicola Willis is choosing cuts that will make it harder for people to get help when they need it. This is a political choice. National is choosing austerity over strong public services and secure jobs."
The Greens' public services spokesperson Francisco Hernandez compared the cuts to US billionaire Elon Musk's approach, calling them "DOGE style libertarian fantasies". He accused Luxon of breaking a 2024 promise that frontline services would be "protected".
"Nicola Willis is committing New Zealand to arbitrary headcounts which will eat into frontline services to balance her books, all because she lacks the courage to have an adult conversation about fixing our broken tax system," he said this morning.
'Just what the doctor ordered' - Seymour
From the right flank, coalition partner ACT and lobby group the Taxpayers' Union said the Government had not gone far enough.
Party leader David Seymour said the target was "a slower reduction than ACT campaigned on" but welcomed it as proof of his party's influence in Government.
"For years I’ve spoken to businesses forced to make tough choices, meanwhile the public service has grown through thick and thin using larger amounts of taxpayer money in unnecessary ways," the ACT leader said in a media release.
"Fewer departments, fewer bureaucrats, and the public service sucking up less taxpayer money is just what the doctor ordered."
He added: "Saving taxpayer money hasn't always been popular. ACT has copped the most criticism for it, but the alternative is going broke as a country.
"New Zealand cannot protect its first-world status if government keeps growing faster than the people who pay for it."
Seymour also called for change at the top of Government, saying he had called for "no more than 20 ministers, with one or two departments each, and no department with more than one minister".
"Like many initiatives to reduce government waste, the Government has not gone as far or as fast as ACT would. But it is going much further than it would have without ACT's influence," he said.
“My state of the nation speech in February called for a smaller, more efficient Government. I said New Zealanders feel like hard work goes unrewarded, because bureaucracy sucks up any cream they create."
'The halfway mark, not the finish line' - Taxpayers Union
Meanwhile, a spokesperson for right-wing lobby group the Taxpayers' Union, Tory Relf, said the 55,000 target "must be the halfway mark, not the finish line".
"This is a step toward surplus, but taxpayers should not have to wait until the end of the decade for the books to balance. Next week’s Budget needs to go further and cut harder across the board to bring the books back to black," she said.
“Cutting the public service headcount is a big win for taxpayers.
"At long last, Minister Willis is putting some backbone into the books. But 55,000 must be the halfway mark, not the finish line. When National left office in 2017, the public service sat at around 47,000 FTEs - if that was enough then, it should be enough now.”
"The proof of the pudding will be in the eating: public service numbers must actually fall."
Public Service Minister Paul Goldsmith said the changes were about ensuring the public service was "modern, focused, productive and financially sustainable over the long-term", with reductions to be achieved through digitisation, mergers and natural attrition.
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