Christopher Luxon says public service cuts will be on 'case-by-case basis'

New Zealand Prime Minister Christopher Luxon confirmed that public service job losses will occur as part of government reforms aimed at improving efficiency. Speaking to reporters at Parliament on Tuesday, Luxon emphasized that the public sector is not a ‘make-work’ scheme and must evolve to better serve New Zealanders. He highlighted opportunities to leverage technology, including AI and digitization, to streamline processes such as identity verification for housing purchases or tax credit calculations. Finance Minister Nicola Willis will present three proposals in her Auckland pre-Budget speech on Tuesday afternoon, focusing on cutting and merging government agencies, accelerating digitization, and reducing the public service headcount to 1% of the population by 2029. Luxon noted that some agencies, like the Ministry of Business, Innovation, and Employment (MBIE), currently face redundant IT and back-office functions that could be consolidated. Infrastructure Minister Chris Bishop is overseeing the amalgamation of ministries responsible for environment, housing, transport, and local government functions into a new entity, MCERT, set to launch on July 1. Bishop acknowledged that immediate savings are unlikely, but the restructuring aims to improve collaboration with local governments on challenges like housing and climate adaptation. He rejected claims that Wellington or the Hutt Valley are solely public service hubs, describing the region’s economic diversity. Luxon cited Singapore and Malaysia as examples of countries effectively using AI in public services, such as automating identity and income verification for citizens. He stressed that reforms are necessary to modernize a system that has remained largely unchanged for decades. While no specific job loss figures were provided, Luxon confirmed attrition and targeted reductions over time.