Public Sector Cuts Fail to Reduce Mid-term Costs

WELLINGTON, New Zealand - Feb. 2, 2025 - PRLog -- PUBLIC SECTOR CUTS FAIL TO ADDRESS EFFICIENCY OR MID-TERM COSTS

The Finance Minister had requested that ministries and agencies cut expenditures by 6.5 - 7.5 percent as a method for reducing public service spending.

Over the past two quarters, thousands of public service jobs were cut to help offset rising costs and degrading government finances.

Updated trend analysis reveals that these cuts may have limited impact to mid-term cost reduction as hierarchical structures of most organisations remain unchanged.

Cursory analysis of 2011 public sector cuts, under then Finance Minister Hon Bill English, resulted in many roles being re-established within the mid-term, often due to staff attrition.  Moreover, the similar 2011 cuts addressed few management roles nor established longer term efficiencies.

By avoiding restructuring of management hierarchy, the New Zealand government departments appear to follow a cyclic trend in dis-establishing then re-establishing similar roles in the election cycles.

New Zealand government lacks a Public Service Framework by which departments determine staffing ratios for improved efficiencies to structure and hierarchy.

In Australia, the Australian Public Service Commission (APSC) assists agencies to implement the APS Framework for optimal management structures.  In their guidance they indicate that optimal government service organisations that provide high level service delivery have ratios of 1:6 to 1:9 managers to staff.

Similarly, the United States Department of Interior has specified the requirement to establish a minimum of one (1) first-level supervisor for every ten (10) employees (1:10). [OPM FedScope]

In New Zealand the ratio of management to staff averages 1 manager to 4 employees (Wellington based departments).  This ratio of managers to staff means the New Zealand government organisations retain higher numbers of hierarchical layers, with low management to staff ratios.

Trend Analysis shows there is potential for substantially more efficiency, if the Finance Minister integrates restructuring hierarchies to flatten structures as part of any expenditure cuts.