UPDATE 1-New Zealand plans to cut public service jobs to save NZ$2.4 billion

​New Zealand's government plans to cut thousands ​of public service jobs ‌and avoid pre-election ​giveaways in this month's budget, Finance Minister Nicola Willis said on Tuesday, as the ruling centre-right coalition seeks to burnish ‌its economic credentials ahead of a close-run November election. In a pre-budget speech to Business North Harbour, Willis said the government would reduce the core public service to no more than 55,000 ‌full-time equivalent employees by July 2029, 8,700 fewer than in December last year.

​New Zealand's government plans to cut thousands ​of public service jobs ‌and avoid pre-election ​giveaways in this month's budget, Finance Minister Nicola Willis said on Tuesday, as the ruling centre-right coalition seeks to burnish ‌its economic credentials ahead of a close-run November election.

In a pre-budget speech to Business North Harbour, Willis said the government would reduce the core public service to no more than 55,000 ‌full-time equivalent employees by July 2029, 8,700 fewer than in December last year. The target ‌would return the core public service to about 1% of New Zealand's population, which Willis described as its historic norm. She said the cuts would not apply to teachers, nurses, doctors, police or workers employed ⁠by Crown ​entities.

"With an election ⁠around the corner, it's tempting to proffer another spending band-aid," Willis said, rejecting "free" policies or cash handouts. "Our ⁠government is not going to repeat those mistakes." The May 28 budget will reduce most agencies' operating budgets ​by 2% in the coming year, followed by a further 5% in each of ⁠the following two years, generating NZ$2.4 billion ($1.44 billion) in savings over the forecast period, Willis said.

Willis said ⁠New ​Zealand faced a volatile global environment, high public debt and an annual debt interest bill of about NZ$9 billion. "New Zealand simply can't afford another failed spend-up," Willis said.

The New ⁠Zealand government last week said it would set new operating spending at NZ$2.1 billion for ⁠the 2026-27 year, around ⁠NZ$300 million lower than it had forecast in December, but would increase capital spending to a net NZ$5.7 billion. ($1=1.70 New Zealand ‌dollars)