Job cuts expected for public service savings

Unions say crucial jobs will be axed after further slashes to public service funding were announced in yesterday's budget, but Finance Minister Bill English says there is still room to trim fat in the sector.

Government departments will have to reign in spending over the next three years to scrape together close to $1 billion of savings called for in the budget.

Under the changes, $650m will be saved by having individual departments pay the employer contribution to public servants rather than having it centrally funded.

A further $330m will be cut from core government administration in 31 agencies.

Public Service Association national secretary Brenda Pilott told NZPA the public service had suffered 2000 job cuts in the past two years, and there was nothing left to trim.

"The idea that we're going to find another $330m without there being service cuts, I simply don't believe."

Ms Pilott also criticised the Government for failing to take a leadership role in the cuts, instead passing the burden to individual departments.

Speaking to media following a post-budget speech in Wellington this morning, Mr English said there had been no estimates about the number of jobs that could be lost.

"It's not fundamentally about the jobs, it's about the services to the public, and often it means people changing jobs and sometimes it will mean less jobs."

While the public service had been working to provide more services for less funding for the past two years, it was still in "reasonable shape" to make further changes, he said.

"There are still a few things the Government's doing that you'd classify as 'nice-to-haves', but we're not rushing in to randomly pick those.

"We'll be working with the public servants to work through what programmes are less effective, which ones are more effective, which back office costs we can do without."

Between $300m and $400m could be saved if all the departments moved to the average costs for things like administration, he said.

More "tightening" in the sector would continue over the next four or five years.

While no departments were cut in yesterday's budget, the Government has indicated the long-term goal is to reduce the number.

"Our main focus is on providing more services, if less government departments is going to help that then we might do it. We don't want to restructure for the sake of it."

Meanwhile, Mr English defended cuts to the KiwiSaver and Working for Families schemes.

Critics have said the changes will take away incentives to save and will widen the income gap.

"We've been setting out to turn around a $16.5b deficit, the biggest deficit New Zealand has ever had, and we spread the burden of that in a pretty reasonable and balanced way across a whole lot of the Government's programmes," he said.

Mr English said there were no plans to make further cuts to the programmes.

"We've made changes to those programmes that we believe put them on a sustainable footing, and we're not planning to make changes to them in the future."