New Zealand’s government has announced plans to cut nearly 9,000 public sector jobs by mid-2029 as part of a broad spending reduction strategy aimed at saving billions, Finance Minister Nicola Willis said on Tuesday.
The layoffs will amount to around 14% of public sector employment, reducing the workforce to about 55,000, down from nearly 63,700 in December 2025.
Willis said the reforms would save approximately 2.4 billion New Zealand dollars ($1.4 billion) over the period.
She added that the government will implement three consecutive years of budget cuts for most agencies, reduce the number of departments, and accelerate the adoption of artificial intelligence across the public sector.
She said the size of the public service had become “unsustainable” and “out of step with international trends,” noting that it currently represents about 1% of New Zealand’s population of 5.3 million.
The government also plans to reduce the number of departments from 39 to a smaller structure, though the final figure has not been disclosed. Defence personnel, teachers, and healthcare workers will be exempt from the cuts.
Prime Minister Christopher Luxon supported the plan, calling a more efficient public service “exciting” and saying the state sector should not function as a “make-work function.”
However, opposition leaders and unions strongly criticised the move. Labour Party leader Chris Hipkins warned that such large-scale reductions would likely impact frontline services, while union representatives described the decision as “an act of willful destruction.”
The government has blamed rising public sector costs on previous policies and says the restructuring is necessary to restore fiscal discipline ahead of the upcoming election.
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