Public sector cuts: Potential savings to be made with HR, payroll, technology shake-up

New Zealand’s Finance Minister Nicola Willis has outlined a major overhaul of public sector technology and HR systems to deliver $2.4 billion in savings over the next five years. The plan includes consolidating HR and payroll functions into a single centralized system, reducing departmental duplication, and increasing artificial intelligence adoption. Officials aim to create 10 digital agency clusters by June 2028, where agencies share ICT systems and digital services instead of operating independently. The government will also roll out digital public infrastructure, including a government app with two million downloads and four million digital identity credentials. Willis emphasized that these changes will improve efficiency and deliver world-class digital services. While multi-agency technology solutions may require higher short-term costs, officials predict long-term savings of $200 million to $330 million by mid-2028, scaling to $3.7 billion to $5.9 billion by year 10. Additionally, the Public Service Commission and Ministry of Justice are exploring ethical transitions between government and private sector roles, addressing concerns about the ‘revolving door’ phenomenon. The private sector will play a key role in implementing the digital overhaul, with officials stressing that shared technology platforms will benefit the government as a whole. The reforms follow Willis’s earlier statements on potential spending cuts in HR departments, aiming to streamline operations and reduce inefficiencies. The government’s digital transformation is positioned as a critical step toward a more efficient and cost-effective public service.