Single ministry has spent $6.3m on job cut payouts

National's finance spokesperson Nicola Willis Photo: RNZ
Finance Minister Nicola Willis has not asked for an estimated price tag. Photo: RNZ
The cost of slashing public servants at a single government department has already exceeded $6 million.

The Ministry of Business, Innovation and Employment is among the agencies axing jobs, as part of the government's public service cuts.

Almost 2000 jobs across 19 departments have already been disestablished, or will soon be.

But the total cost of redundancies across the public service is not yet known and the Finance Minister has not asked for an estimated price tag.

Nicola Willis has received advice on the total number of senior public servants, which reveals a "huge" increase in the number of people employed in those highly-paid roles in recent years.

"Sadly, these increases have not led to demonstrable improvements in the areas that matter most to Kiwis," Willis told RNZ.

MBIE is one of the biggest government departments - employing more than 6500 staff - and has so far axed 286 jobs, with more redundancies expected.

The ministry has confirmed to RNZ it had paid 138 employees redundancy pay-outs so far, totalling around $6.3 million.

Corporate services deputy secretary Richard Griffiths told RNZ the payments "include a mix of outcomes related to our initial voluntary redundancy process, as well as stop work notices and formal change processes".

The total cost of job cuts at the ministry will not be known until it has finished consulting with staff.

MBIE is the only ministry to provide RNZ with the amount spent on redundancies to date. Other departments told RNZ that staff were still being consulted on proposed job cuts, so the estimated cost of redundancy pay-outs was not yet known.

Using information supplied to Parliament's Select Committees, RNZ found the average redundancy or termination payment for a public servant is about $50,000.

RNZ totalled the amount paid in redundancies across 10 agencies over four years and divided it by the number of staff who had lost their jobs.

Willis' office said the Minister had not received advice on the projected cost of redundancies across the public service as a result of the government's spending cuts.

It would be impossible to currently calculate the cost of redundancies as public departments and agencies were still deciding how many jobs to cut, the minister's spokesperson said.

Willis' office also confirmed the cost of redundancies would be covered by department and agencies' existing funding.

The exact amount of each public servant's redundancy pay-out would depend on their salary, entitlement and employment agreement - if a staff member is employed in a senior role, they would likely receive a greater pay-out than a junior staffer.

Tiers examined

There has been some concern among public servants that managerial roles were not facing the same threat from job cuts as junior employees.

That prompted Willis to seek advice from the Public Service Commission on the number of tier-two and three managers across the public service to ensure it is not too "top heavy".

The minister has since received that advice, which she said confirmed "significant growth in the number of people employed in senior leadership roles across the public service".

The advice, shared with RNZ, showed the number of tier-two managers across the public service increased by 69 roles - or 41 percent - between 2016 and 2023.

The average salary for the 236 tier-two managers was $309,900.

Over that same period, the number of tier-three managers also increased by 323 roles, or 42 percent.

There are now 1084 tier-three managers across the public service, with an average salary of $215,700.

The minister reiterated that senior public service managers are not exempt from cuts across the public service.

"I am advised that several of the change proposals that public agencies are currently consulting on include reductions in the number of tier-two and three roles.

"Even so, I've asked the Public Service Commission to keep a track of the overall impact changes have on senior roles when compared to more junior roles. I don't want the public service to be too top heavy - that wouldn't be good for the everyday public service workforce, nor the people they serve.

"In my view management structures should be efficient and accountable, so as to deliver good results for New Zealanders."

Willis said she would review the total number of tier-two and three public servant roles, relative to the overall size of the public service workforce, after May's Budget.

"I will then consider what, if any, changes may be needed."