As ministers prepare their wish lists for the upcoming Budget, the message from Finance Minister Nicola Willis to agencies has been blunt: Don’t reach for taxpayers’ wallets before checking your own books.
Agencies have been warned to hunt for efficiencies every year, not just in lean times, as the Government weighs what it can afford to fund. After imposing a baseline savings target in 2024 and demanding specific cuts in 2025, Willis has now made clear that the search for savings is permanent.
Willis confirmed on Monday she wrote to all agencies "very early on in the budget process" last year, "who now know that it's expected in every budget that they constantly be looking for cost savings".
"In part because the position I take is [if] there's new investments you want to make... or areas that you think need additional funding, your first port of call shouldn't be the taxpayer and their depleted chequebook. Your first port of call should be finding out what areas you can stop spending money on or which areas are inefficient."
Some agencies would be making cuts to their baselines and delivering those savings back into the Government's coffers, and others would be putting their savings into different spending within the same agency or portfolio.
"Agencies overall have been asked to find savings, and then we will make judgments about whether we think it's sensible to proceed with those savings based on whether or not we think there are better investments elsewhere," Willis said.
If they had been given an amount each agency was expected to save, Willis said that "all agencies get very detailed budget guidance".
Willis said it was always the case she was asking for savings, "then we're weighing that up against investments".
"And overall, the number of savings we ultimately deliver will be dependent on which investments we choose."
9 Comments
Anticipating the most boring budget ever in May.
I hope so too
It'll be interesting. On one hand the govt is the first spender of a dollar, and on the other it forces the private sector to innovate as they learn over time they cannot rely on govt contracts and need to find other niche markets to explore. Let's see what happens to the big consulting giants over the next few years with AI implementation and the savings govt can find there perhaps.
"Let's see what happens to the big consulting giants over the next few years with AI implementation and the savings govt can find there perhaps. "
My prediction: the big 4 etc will make much more money with much less grunt staff cost by charging central & local govt/soes etc much more which they'll happily pay without concern ...because "we must follow the rules" (which we make) & "its other people's money"
Better still let the Govt get its own AI cost wastage system going, and cut the headcount baggage.
Given the enormous size of the civil service, using the Big 4 reveals gross mismanagement. If they haven't built expertise, what the hell are they doing?
Having worked in the public sector for a number of years my amateur take is as such:
Consultants are used to:
1./ Make staffing budgets look better as consulting is in a different column on the spreadsheet
2./ Outsource accountability for govt employees in middle and upper management. If the deadline is not reached, they blame the consultants and can keep their jobs without being raked over the coals. Rinse and repeat, claim what achievements they can then move up the ladder to a better role. While this may no always be the case, I have seen it again and again.
I'm somewhat conflicted with this. While i believe every government department should be efficient and effective at delivering their services, a government direction for savings tends to impact the frontlines rather than senior levels of the organisations. Frontline staff pay and conditions stagnate or reduce while work loads increase, Burn out follows across the board and efficiencies and effectiveness tends to fall off. Of course the higher levels are really good at saying the right things while chaos rules beneath them leading to the old adage/ joke "The whippings will continue until morale improves!"
The consequences of Willis's exhortation are more likely to be negative that anything else.
No wonder the RBNZ does not see growth returning to the NZ economy this year. Pro-cyclical fiscal policy is not normal or recommended by anyone who understands fiat currency based economies. NZ is not on the gold standard anymore - surprise. Someone needs to let the Finance Minister in on the secret.
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