Govt Consultant Crackdown to Save $800M, Workforce Shrinks by 4% in One Year

Public Service Minister Judith Collins announced the update today, hailing the cost-cutting initiative as a major success in the Government’s ongoing efforts to ensure smarter, more efficient use of taxpayer dollars.

The New Zealand Government is on track to achieve an impressive $800 million in savings over two years by significantly reducing expenditure on consultants and contractors across the public sector — double the original $400 million target. Public Service Minister Judith Collins announced the update today, hailing the cost-cutting initiative as a major success in the Government’s ongoing efforts to ensure smarter, more efficient use of taxpayer dollars.

Doubling Down on Cost Reduction

“When we set a two-year target to cut $400 million in consultant and contractor spending by 2024/25, we knew it would be ambitious,” Collins said. “But I’m proud to share that we’re now on track to save over $800 million by the end of June.”

According to Collins, these savings represent more than just fiscal discipline — they directly translate into enhanced funding for essential public services such as healthcare, law enforcement, and education.

“That’s $800 million that can be spent on delivering core services to taxpayers,” she added. “Taxpayers expect their money to be spent wisely. These savings reflect our commitment to responsible governance and accountability.”

Public Sector Workforce Sees Strategic Shift

Alongside the financial savings, the size of the core public service workforce has also seen a notable reduction. New data released by the Public Service Commission shows that in the 12 months to December 2024, the number of full-time equivalent (FTE) public servants fell by 4 percent, from 65,699 in December 2023 to 62,968 by the end of 2024.

Collins clarified that the decrease has been concentrated primarily in administrative and support functions, with frontline service roles seeing a corresponding increase.

“This reduction largely impacted back-office roles and has been offset by growth in the number of frontline staff,” she said. “We are focused on putting resources where they’re most needed — into services that directly impact New Zealanders’ daily lives.”

Reining In Unsustainable Growth

The Minister also highlighted concerning trends in public sector costs under the previous Government. From 2017 to 2023, the total salary bill for the core public service grew a staggering 72 percent, reaching approximately $6.1 billion per year.

“We simply do not have sufficient taxpayers to support that kind of unchecked growth,” Collins said. “The system was expanding far beyond what was sustainable. Our approach is about restoring balance, cutting unnecessary bureaucracy, and prioritising delivery.”

A Long-Term Strategy

The Government has made it clear that this is not a one-off cost-cutting exercise but part of a broader, long-term strategy to reshape and refocus the public service. The intention is to ensure that every dollar spent delivers meaningful value for the public, with minimal reliance on external contractors and consultants.

“We’re not just trimming budgets — we’re redefining what a modern, efficient, and effective public service should look like,” Collins said. “New Zealanders deserve a public sector that delivers results, not one weighed down by bloated contracts and duplicated functions.”

She confirmed the Government would continue to scrutinise departmental spending and maintain its focus on limiting workforce growth to ensure long-term fiscal sustainability while safeguarding and enhancing essential frontline services.

Looking Ahead

As June approaches and the $800 million milestone draws near, the Government says it will maintain momentum to ensure these savings are locked in and redirected to improve everyday services for citizens.

“These are real, tangible savings with a real-world impact,” Collins concluded. “This is what good government looks like — responsive, efficient, and firmly focused on the needs of the people it serves.”