Let's start with the big story of the day: the Finance Minister yesterday unveiling a major plan to shrink the public service. It's putting thousands of jobs on the line, but it is booking, potentially, billion-dollar savings into this year's Budget. So the interesting thing about her announcement —there were precursors to this, so this is stuff we knew, but it's all brought it into focus— is the pure numbers that we're talking about. 

So the Government wants to reduce the size of the core public sector. At the moment it's at 1.2% of the population. 1.2% of working New Zealanders work for the Government – they want to bring that down to 1%. So as we learned the other day, New Zealand's population sits at around 5.3 million. That, if you do the maths, means about 6–8,000 roles should go. The actual number they mentioned though was closer to 9,000. The savings will come from trimming staff numbers. They want to merge departments, and they want to increase the use of AI to improve efficiency.  

Now, of course some of us had thought that the cull of the public servants had already started. Wellington's economic stagnation has been blamed on that first round of efficiency cull, but it appears that not much was achieved. And here again, the numbers tell the real story. Back in 2017 there were 48,000 public servants. This ballooned under the Labour Government to 63,000. But despite all the angst in Wellington about bureaucratic redundancies over the past two years, the fact is there has not been a dramatic reduction in head count. In 2023, there were 63,000 public servants in this country. Today, in 2026, there are still 63,000 public servants.  

It's a dynamic world, the world of business and employment, and it's a bit like whack-a-mole. You cut here, but then you have to increase the cohort there every time you launch a new programme. If David Seymour gets his immigration policy over the line and we're going to crack down on overstayers more, they're going to need a whole lot more immigration workers – but they just fired a whole lot of those. Our search for 500 extra police officers was proof of how difficult all this can be. As fast as we hire a new cop, an old cop quits. So, we're running as fast as we can to stand still.  

These 63,000 people in the core public service, guess how much they cost the country? Guess how much? $11 billion a year. On average, and wait for this, each role costs about $175,000. I know. Well actually, the average wage is more like $100,000, but there's a whole lot of guys who are paid a whole heap more, so that brings that up a bit. Also it's the cost of disestablishing the role. But anyway, the fact of the matter is reducing those numbers will save hundreds of millions of dollars annually and potentially billions of dollars over the Government's four-year forecast period. 

Here's the thing, it's forecast over four years and even though these job cuts won't happen immediately, the Government plans to count these savings in this year's Budget, which is a week away. Based on the firm target that they're going to reduce head count by 9,000. So they're already talking about it. They're already saying before they've done a thing, hey, we've got an extra $2.4 billion and we'll be able to buy more services with that. And they're going to be doing that this election campaign; they'll be doing it next week over the course of the Budget. That's a very pretty $2.4 billion, isn't it? It sounds really good, but it'll take four years to achieve it if they achieve it. And I would ask you, is that counting your chickens before they hatch? 

So the process is easy to say, but I think you'll find it's much harder to do. And if you lay down an arbitrary target, we're cutting 9,000 jobs, that doesn't necessarily mean that the target will be met or met appropriately. So look, it's your show. What do you have to say about it? Are you confident that this can be done? Are you confident that this can be done and our services won't be unnecessarily reduced? 

There's another little debate we can have about the cut to the public service right now and that's the political fallout. This is an election year. Now many on the right will congratulate the move, and indeed they already have. And indeed, they're already asking why did this not happen two years ago? We thought the cull had started. I think the number you'll find that they've done is around about 2,000. Now they're talking about 9,000. Why didn't they talk about 9,000 two years ago? But anyway, the right will say great, good job, we need this. How will swinging voters feel about a cull? It's hard times and suddenly neighbours, family, friends are losing their job. 

And remember with every job cut, the ripples spread out, affecting the private economy. There's an old rule that says every job lost affects three more down the economic chain. So if we've got 9,000 jobs cut over the next four years, we've got nearly 40,000 other jobs that will be economically affected. So the political fallout, will this just harden the dislike for the Coalition among swinging voters who chop and change? And of course, the left, well they detest it immediately, don't they? They just hate this stuff. So the question politically, in doing this and doing it hard and doing it like this and doing it with such fanfare, is the Government shooting itself in the foot? Or will they be rewarded for finally stepping up their game?