OPINION

Ordinarily, news stories about mass redundancies in particular sectors are a sign of impending economic doom. However, New Zealand is already in a technical recession and the highest-profile sector facing job losses is the public sector. That is a spark of economic promise: a Government that is at least attempting to cut wasteful spending for tax cuts.

Currently over 1300 job cuts are expected across a range of Government departments. Evidently there is still some way to go and these figures are still subject to whatever proposals are accepted by Finance Minister Nicola Willis but I cannot remember a time in which New Zealand had a Government with such commitment to gutting the public service.

The Department of Conservation is the latest department to publicly announce its headcount reduction targets, with 130 roles proposed to be disestablished. In addition to cutting jobs, DOC also proposes to cancel $7.2 million worth of projects. In their briefing to incoming Minister Tama Potaka following the change of Government, officials said they were failing to achieve their targets against predators and invasive species. Extreme weather, climate change and the number of visitors were also blamed for their inability to restore up to 4000 species at risk of extinction.

In 2015/16, the Department of Conservation’s budget was just under $400 million. It had increased to $520 million in 2019/20, $645 million following Covid in the 2022/23 budget and crossed the $700 million mark last year. Visitor numbers would not have had much impact on DOC’s expenses during the Covid period but, despite their taxpayer allocation growing 25% during that time, they have not managed to upgrade visitor infrastructure to manage the influx today. Clearly, DOC will always fail to meet expectations no matter how much money they receive and the current levels are unsustainable.

The Commerce Commission will potentially cut 10% of its current 400 staff. Unfortunately, the Chief Executive Adrienne Meikle is confident that the cuts will not impact the Commission’s “statutory functions”. That is unfortunate because aside from being a tool of Governments to browbeat unpopular industries with worthless market studies, the Commerce Commission also has other functions that simply should not exist. Regulating competition and persecuting companies that act in a ‘non-competitive’ nature is the anathema of a free market. It is worth remembering that, at a time when large media companies are slashing their workforces across all mediums, the Commerce Commission has actually prevented mergers in the past, which might have strengthened the landscape now. In 2016, Fairfax and NZME proposed merging their businesses; this was denied by the Commerce Commission leading to the sale of Stuff to Sinead Boucher for $1 in 2020.

Ironically, the Government is being criticised for reducing its ability to minimise the cost-of-living crisis. How effective a tool has the Commerce Commission been? A market study into petrol prices showed nothing untoward while a market study into the supermarket sector appointed a Grocery Commissioner who has done nothing.

The Ministry of Business, Innovation and Employment has been tasked with finding $400 million worth of savings. Already MBIE has proposed cutting 25% of the roles in the information and education team, while the stop-work notices issued to MBIE following the change of Government have resulted in the disestablishment of 77 positions across three projects. So far, 218 positions out of 6000 have been cut but a new round of voluntary redundancies will increase that further.

While the Act party’s desire to send in Guy Fawkes to blow the place up is yet to be realised, the identitarian Ministries are facing some of the biggest cuts proportionally. The Ministry for Pacific Peoples will cut 63 out of 156 positions, the Ministry for Ethnic Communities will reduce its headcount from 64 to 55 but the Ministry for Women is yet to announce any job cuts. A spokesperson has said they are going to identify efficiencies, not reappoint some vacant roles and work with staff to identify areas where savings could be made. No work is being done on redundancies.

Of course, all these organisations should be completely abolished but they aren’t going to make much of a dent in the Government’s deficit. The Ministry of Women costs $15 million a year, with the Ministry of Pacific Peoples doling out $89 million and the Ministry of Ethnic Communities spending $20 million in last year’s budget. Meanwhile the Ministry of Maori Development, which received a package of $825 million in the last budget, is yet to make any cost savings announcements.

As the Government embarks on this series of essential cost-savings measures, others are asking why? The National-led coalition remains steadfast in its determination to deliver tax cuts in the first budget while many criticise them for doing so in the current economic environment. Such opposition is ignorant of the impact tax cuts have on economic growth and fails to appreciate just how much fat there is to hack away in the budget. Government spending soared from $100 billion in 2018/19 to $166 billion in 2023/24. A two-thirds growth in Government spending over five years has been accompanied by a track record of failed targets, policies that goes nowhere and a prolonged economic malaise.

While it is true that tax cuts can be inflationary when they are funded by borrowing instead of spending cuts, that isn’t an argument against tax cuts; that is an argument for much more aggressive spending cuts to fund the tax cuts. A poor economic outlook over the next few years is not an excuse to maintain tax levels; it illustrates the urgency of cutting taxes significantly. While the Government’s first steps are promising, their current approach resembles cutting the crust off bread rather than the bold, transformative reforms New Zealand has urgently needed since Jim Bolger dropped his guts in the mid-90s.

Stephen Berry is a former Act candidate and Auckland Mayoral candidate. The libertarian political commentator retired as a politician in July 2020 and now hosts the Mr Berry Mr Berry Show on Youtube.