Appropriation (2026/27 Estimates) Bill

Committee of the whole House—Estimates Debate

Oh yes, sorry, Madam Chair. I sat in the wrong place.

The Governance and Administration Committee met on 17 June to hear evidence on Vote Public Service. This is the first time that we’ve had the opportunity to scrutinise the evidence of the Minister for the Public Service and Digitising Government under the new portfolio area where the responsibility of digital leadership functions has been transferred on 1 April 2026 from the Department of Internal Affairs to the new Government Digital Delivery Agency.

A number of things were talked about at this particular meeting. Budget 2026 proposed to allocate $131.5 million for Vote Public Service. It’s a decrease from the estimated actual spending of $132.7 million in 2025-26, and it comprises, again, the new appropriation for Government Digital Delivery Agency and then other matters within the Public Service.

As I said, a variety of topics were covered at the hearing. We talked about changes in workforce and resourcing for the Public Service, the role of new technology, and, of course, the Government digital delivery agency. Some other subjects were covered briefly in that hearing as well. Record-keeping and the review of the advertising campaign were two such topics. I will leave it there because I know that we have a short time and spokespeople will be wanting to ask their questions. Thank you.

Committee of the whole House—Estimates Debate

Thank you, Madam Chair, and welcome to the Minister for the Public Service and Digitising Government. I have some questions, and I know we’ve only got half an hour with the Minister, so I have two areas that I’m interested in looking at.

The first area is the biggest area. This year’s Budget was focused on a reduction in the Public Service headcount in order to balance the Government’s Budget. We’ve had very few details on the nature of those cuts to Public Service job roles. I did ask the Minister of Finance when she was in the chair around what progress had been made. I also asked her around the fact that subsequently, since the original cuts were announced in the Budget, there has also been a request to chief executives to produce by the end of August a report on the nature of the cuts within their particular agencies. The Minister of Finance told me that those are two separate processes, so I’d like the Minister, as the Minister for the Public Service and Digitising Government, to explain both of those processes, if they are indeed separate, and if the Minister of Finance has said they are a separate process, what the overall reduction would be. The Budget announced $2.4 billion in money that would be saved due to these job cuts and around 9,000 fewer roles. Is that still the case?

Specifically for the Minister, in relation to these cuts, can the Minister name the public services that New Zealanders currently receive that they will no longer receive as a result of the cuts? A specific question as well: is the 55,000 reduction over the entire forecast period and the number of 1 percent of a growing population fixed, or will that rate of Public Service headcount fall or rise depending on the population? I think that’s important for understanding what the impact of this decision will be. Also, because this has progressed somewhat since the Budget, can he give us an updated forecast on the costs of redundancies and resulting change in contractor and consultant spend as a result of the decisions made in this Budget?

Committee of the whole House—Estimates Debate

Well, there were a lot of questions there and I’ll try to remember them as I go through. The first point was around the two sorts of areas of focus. One was the public sector transformation, which is set to save $2.4 billion, as the member said, and then alongside that, but not entirely the same thing, is a reduction in headcount.

It’s worth just reminding people that when Bill English left as Prime Minister and we were kicked out in 2017—although people might sort of question that—47,000 people were working in the public sector. Then we came back six years later and that 47,000 had grown to 63,000. It had been an increase of 34 percent, so 16,000 extra people were hired over six years. New Zealanders quite rightly sort of scratched their heads and thought, “Well, am I getting a 34 percent better service from the public sector?” Then they looked at school attendance and that had dropped. They looked at immunisation rates and those had dropped. They looked at the state of the public finances and it had gone badly into reverse. They looked at law and order and it was falling apart. They quite legitimately asked the question, “Well, we’ve hired all these extra people and the outcomes that we’re getting are worse.”

We have set a goal as a Government to restore the overall numbers of public servants to the historic kind of mean, which is roughly 1 percent of the population, which would take us back to 55,000 in three years. We have ourselves that goal, and in the interim, we’ve asked chief executives to come up with a stepping stone towards that in the next little while. We’re getting some advice coming back about how people will do it and how they’re going to achieve it. That is a work in progress, but we’re sending a very clear message that we want to get our house in order.

Why does this matter? This matters because, ultimately, in this Budget, the core figure of this Budget is that we are still borrowing over $11 billion this year. We’re spending that more than we are earning it as a Government. That bill is being passed to future generations. We have a determination, on this side of the House, to live within our means. We have set a goal to get back to surplus, and part of that is being disciplined in our spending.

Now, it’s much easier to go on a hiring spree and hire a whole lot of people. It’s more difficult to bring that back, and that’s what we have to do as a Government. It’s not about cutting; it’s about bringing the overall numbers back to a historic average. At the same time, of course, by being clear in our outcomes and targets and focus, we are determined and expecting to have better outcomes for New Zealanders as a result. We’ve managed to achieve that in things like truancy, in immunisation rates, in restoring law and order. There isn’t a perfect relationship between the number of people that a Government hires and the outcomes, and that’s what our focus is.

Committee of the whole House—Estimates Debate

Thank you, Madam Chair. I have some further questions for the Minister for the Public Service and Digitising Government, really around the artificial intelligence (AI) assumption. In the context of a large number of cuts across the Public Service, AI is often heralded as the kind of hero that’s going to step in and do that work for them. My questions here are really around what the Minister has factored in as the costings for AI. I had an opportunity to ask the Minister of Finance that question back in scrutiny week and was told, well, not much, really, other than that 970 Microsoft 365 Copilot licences had come in, at a cost of $423,289.50 in the 2025-26 year.

My question, really, for the Minister is: what is the forecast spend on AI for the Public Service? Of the jobs that are going and the cost saving that is assumed on that basis—some more detail around how many of those jobs are likely to be offset through the use of AI, and what is the cost attributed to that uptake and adoption of AI? Also, what work or examination has been put into the fact that there will be a lot of issues that result through the use of AI, where the Public Service process takes longer because members of the public can use AI in ways that tie up or complicate those interactions? I’m interested in some answers from the Minister on those questions.

Committee of the whole House—Estimates Debate

Well, I thank the member for his question. Towards the end of it, he was making a point which is most relevant, in the sense that New Zealanders are using AI and they’re adopting it vigorously. We’re living in the moment of a very significant technological change, which, like every significant technological change, will bring some benefits and it will also bring some problems. Our goal in Government—and every New Zealander out there will be thinking, “Well, how do I maximise the benefits and minimise the problems?” That’s what we’re doing there. We’re expecting the Public Service to be early adopters.

Wearing my Communications hat, if I speak to a chief executive of One New Zealand or one of the communications companies, and you ask them what they think about artificial intelligence (AI) and what are they worried about, they’re worried that their competitors will figure out how to make better use of AI faster than they do, and they’ll go out of business. That is the competitive tension that many businesses around the country are facing: how do I stay ahead of the technology? How do I figure out how to make use of it faster than my competitors in order to succeed?

Now, that sort of logic, of course, doesn’t apply if you’re the Inland Revenue or the Ministry of Justice; you don’t have a competitor out there trying to beat you. Our worry is: how do we motivate the leadership of the public sector to ensure that they are as agile and fast in looking for ways to make use of this technology and don’t just sort of cruise and coast for five years and let things pass them by. As is obvious to everybody, there is room for improvement in the delivery of services. If I take the example of Justice, where we’ve just been in the last half hour, there are still long delays in the court system, and that is because of very clunky old systems. The use of AI may be able to speed that up in a useful way, so of course we’d be expecting people to do that.

The overarching purpose of expecting ministries to make use of new technology is not to reduce headcount; it is to deliver better services. That’s what it’s fundamentally all about. We want to have better services that are more attuned to the needs of New Zealanders to make it easier for them to do things. One of the mantras that we’re trying to get through is “tell me once”. New Zealanders deal with the many elements of the Public Service and are constantly having to fill out the same information over and over again and are frustrated by that—finding ways whereby we can get that information in a more seamless and digitised fashion. Case in point on that is the Electoral Commission, where every three years, we’ve got to go through this laborious process and send letters out to every letterbox in the country getting people to enrol all over again, which should be a very simple digital task. Those are the sorts of basic things that New Zealanders would expect us to do.

Committee of the whole House—Estimates Debate

Thank you, Madam Chair. I’d just like to follow on from the line of questioning by my colleague Reuben Davidson around the use of artificial intelligence (AI) and new technologies in the Public Service. My first question to the Minister is: is it the Minister’s expectation that when going out for procurement for artificial intelligence providers across the Public Service, departments go through an open tender process and follow the procurement rules for procuring technologies that will get rolled out for use in their departments?

My second question is: what safeguards, if any, is the Minister planning to take around tech procurement and issues around the deployment of artificial intelligence? We’ve seen some rather large-scale failures of technology procurement in the Ministry of Business, Innovation and Employment, in Immigration, just over the past couple of years, so it would be good to get some assurance from the Minister that we are walking into this brave new world with eyes open, so to speak.

My third leg of the question around the use of AI is: will the Minister guarantee, as artificial intelligence gets rolled out through things like the Government Digital Delivery Agency, that the Minister will cement the right to see a human and the right that in all judgments, in whatever automated decision-making processes, and in whatever things an artificial intelligence might contribute to the decision making of, the human who is being judged by the AI has a right to have that decision reviewed by a human being? I’ve used exactly two minutes of my question; I’ll sit down now and let the Minister answer.

Committee of the whole House—Estimates Debate

Thank you, Madam Chair. I know I did ask a lot of questions in my first call—I wanted to make sure I got them all in—but I haven’t had an answer yet to the types of roles that will be cut; the types of public services that won’t be available to New Zealanders as a result of this Government’s cuts. We’ve heard the Minister’s justification for them, but what New Zealanders will experience—those who aren’t directly made redundant from their roles in the Public Service—is really the Public Service roles that will no longer exist.

I’d like the Minister to either provide an answer to that today or, if he can’t, please give an indication of whether prior to the election the Government will be able to clarify the nature of those cuts. I think it is quite imperative as to whether New Zealanders support the direction of travel in relation to the public sector cuts to know what public services will no longer be available. I think it’s a really basic question, and I’d like an answer to that. I’ll leave that there. I do have another area I want to cover if there’s time.

Committee of the whole House—Estimates Debate

Well, in answer to that question, obviously our focus has been to maintain and preserve, where possible, front-line workers. In fact, there’s been significant increases in front-line workers over the last few years in Corrections and in parts of the courts in terms of court security. Front-line numbers have not been reduced. But there were, over the past few years, big increases in middle-management, for example; some areas of policy, for example; and some areas of back-office support, for example, and those areas are being reduced back to somewhere towards historic norms. There had been, as I said, a hiring spree over the previous few years.

In terms of Mr Xu-Nan’s question—

CHAIRPERSON (Barbara Kuriger): No, Mr Hernandez.

Hon PAUL GOLDSMITH: Oh, no, Mr Hernandez’s questions around tech procurement, yes, of course, I would be expecting the processes to be followed appropriately. We have a particular focus through the Government Digital Delivery Agency to get some coherency around that. We don’t necessarily want 39 different departments having individual contracts with the same people, and we do want to gather efficiencies of scale. That’s why we’ve got a central office that is guiding and directing in that space. That, I think, is very important.

Yes, he referred to various IT failures in the past, and so, again, we have a huge focus on reducing the likelihood of those. Of course, there will always be things that go awry, but it is important that we try to reduce the chances of that happening as much as we possibly can. We’re, again, getting some greater centralised direction and leadership from the general group there in order to reduce the Government Digital Delivery Agency, which has been relatively recently set up and put within the Public Service Commission.

Committee of the whole House—Estimates Debate

Thank you, Madam Chair. I do want to thank the Minister for giving some areas that may be impacted, but I do think it does ask New Zealanders to suspend disbelief somewhat to look at the scale of the cuts being proposed and believe that there will be no impact on the services New Zealanders receive. I would appreciate if there would be more detail on the actual nature of the cuts in terms of how they’ll impact New Zealanders.

I just want to move on to the Public Service Commission. That obviously plays an integral role within the Minister’s management of the Public Service. We did have, under the year in review, the Public Service Commission—we have, under the Minister, and actually the previous Minister’s tenure, had a difference in approach in relation to the Public Service Commission. One of those things was we had a Facebook campaign that was run by the commission, and I think around about $250 was spent on boosted posts. Then we had a review that cost $67,000 and came four months late. I wanted to ask the Minister if he’s reflected on that and whether he has instructed the Public Service Commissioner to make sure that decisions of that nature have more foresight in the future. One of the findings of the review was that there was the possibility of the political neutrality of the Public Service Commission being compromised. I wanted to ask the Minister: what has changed in the Public Service Commission since that review in order to prevent that happening again?

Related to that, I wanted to ask the Minister: there’s recently been decisions made by the Public Service Commissioner in relation to their role in bargaining. This has surfaced in relation to a number of different sectors—most recently in health—and just to understand what the Minister’s direction has been to the Public Service Commissioner, and for what reason he has decided that the commissioner is going to take a more active role in public sector bargaining—in fact being the instructing body on behalf of negotiating parties.

Committee of the whole House—Estimates Debate

My expectation of the Public Service Commission is that they operate in a politically neutral manner, and I think it is one of the strengths of our political system in New Zealand that we have a long tradition of a politically neutral Public Service. It will always be a point of commentating and observation; people will have their different opinions.

One important thing for the Public Service, generally, to consider is that they look to improve the level of overall trust that New Zealanders have in them. I think it’s a fair observation to make that institutions across the board, whether it’s politics, Public Service, the judiciary, the police, the media—many have suffered a reduction in public trust, particularly through the COVID period. There is a real focus on restoring those levels of trust. The good news is that all the surveys that have been done recently still indicate—I can’t remember the exact figure off the top of my head—reasonably high levels of trust in the New Zealand Public Service, but there’s always room for improvement. My message to the Public Service Commissioner is always to be mindful of that.

In terms of their engagement in pay negotiations, the tradition has been that the chief executives of the various departments are responsible for those negotiations, but they’re perfectly within their rights to ask the Public Service Commission to lead those negotiations, as well. In some instances, that has occurred that way, and we expect them to go about those in a good-faith way, mindful of the fact that these negotiations are always difficult and we’re trying to get the best value that we can for taxpayers and for citizens. We also want to have as much money available for investing in various programmes, and so those negotiations are carried out as best they can.

Committee of the whole House—Estimates Debate

Thank you, Madam Chair. I just really want to follow up on the line of questioning that my colleague Camilla Belich is asking, because the Minister of Justice has not answered the question around how many jobs are going to be lost as a result of the baseline savings reductions exercise.

It’s really interesting seeing the shift of messaging from the Government. When all this stuff was being announced earlier this year around Budget time, they were all gung-ho around how they were going to scrap thousands of Public Service jobs and they were going to cut so much waste from the bureaucracy, but now that it’s closer to election time, the Minister’s tone has become a little bit more restrained. I wonder if some polling has come through that has shown that actually New Zealanders around the country are realising that cuts to the Public Service—even in the so-called non-frontline roles—are harming the ability of the Public Service to carry on the work.

CHAIRPERSON (Barbara Kuriger): I’d encourage the member to stick to the Estimates. You can put your view on why things might be happening, but please stick to the questions around the Estimates. Thank you.

FRANCISCO HERNANDEZ: This is very related to the Estimates, because, if you actually look at the Budget documents, these baseline reduction savings targets are in the Estimate documents.

CHAIRPERSON (Barbara Kuriger): Yeah, I get that part of the question, and I’m asking you to stay on that part of the question.

FRANCISCO HERNANDEZ: And I am staying on this part, Madam Chair.

CHAIRPERSON (Barbara Kuriger): Great—excellent.

FRANCISCO HERNANDEZ: My question is: how many jobs at this stage, now that we’ve had the benefit of a few months to really nut down and actually estimate how many jobs are going to be lost from the Public Service reductions.

The second leg of my question to the Minister is: has the Minister read the newly released report by the Public Service Association (PSA) which showed that deliberate vacancies in non-clinical roles—also known as administrative roles, also known as backroom roles—have actually harmed people. For example, if there are not enough administrators, clinicians have to do administrative work, which reduces the time they can spend on patient care.

My first leg of the question—will the Minister answer the question—how many jobs in the Public Service will be lost as a result of the Government’s planned baseline savings reduction targets? The second leg of my question is: has the Minister read the report from the PSA, and does the Minister agree that the loss of Public Service capacity, even in so-called non-frontline roles, can lead to actual service cuts and actual degradation in the experience that the consumers of public services experience?

Committee of the whole House—Estimates Debate

Thank you, Madam Chair. I’m just trying to remember the first question—

CHAIRPERSON (Barbara Kuriger): The jobs—number of jobs.

Hon PAUL GOLDSMITH: The number of jobs? Well, the number of jobs—and the member is capable of maths, I’m sure—it was 47,000 when we left Government in 2017, it went up to 65,000 soon after we got back, and our goal is to get back to 55,000 in three years. I’ll leave the member to do the maths there. It had gone up a long way, and it’s going to come back down about half of the way that it went up, because there has been some population growth over that period, and we’ve also invested more in the front line, particularly in the corrections space. That’s the answer to that one. The second one—what was the second one?

CHAIRPERSON (Barbara Kuriger): It was about the non-clinical roles.

Hon PAUL GOLDSMITH: Ah, yes, thank you. I agree that everybody wants to ensure that we have the right people in the right job, and that’s what we’re setting out to do. In terms of saving some money, that’s about ensuring that our overall Budget is sustainable, but I can ensure New Zealanders listening in that our focus is delivering better public services. We do that by ensuring that we’ve got a clear focus. Notwithstanding all the extra public servants that were hired and the huge increase in spending we had during the six years when Jacinda Ardern was in charge, basic things like getting children immunised and getting kids to school went backwards. The number of people living in emergency accommodation went through the roof, so the outcomes—

CHAIRPERSON (Barbara Kuriger): We’re going forward now, and we’ve got two minutes left. I know we’ve got one more question, so could you round your question up, please?

Hon PAUL GOLDSMITH: Well, yes, I’m just answering his other question; he asked me if I’d read a Public Service Association (PSA) article, and I’m afraid—

CHAIRPERSON (Barbara Kuriger): A report.

Hon PAUL GOLDSMITH: —I haven’t read that in great detail, and to be honest I’m a little cynical towards the PSA, because they’re out there in our public ministries outwardly campaigning against this Government. They’ve got little postcards saying, “Throw out the Government”, and it does worry me. In terms of overall perspective, when we have a very significant majority of public servants being members of the PSA and that PSA is actively campaigning to overthrow the Government, it is a bad look, I think overall. I don’t think that’s a very good idea.

Committee of the whole House—Estimates Debate

Thank you, Madam Chair.

CHAIRPERSON (Barbara Kuriger): In about approximately one minute.

CAMILLA BELICH: I’d just reflect that the Public Service Association (PSA) has been around for well over a hundred years, and I understand this is only the second time that they’ve had a campaign to change the Government, so you can make your own reflections on that—as it was raised, Madam Chair.

I do have a quick question: mergers. Is the Minister for the Public Service and Digitising Government planning further mergers within the Public Service?

Committee of the whole House—Estimates Debate

It will fall to the next Government to make such decisions, but we are certainly not making the assumption that the 39 or 38 departments and ministries that we have at the moment are the only way that things can be structured and arranged.

I would make this point: I haven’t had an opportunity to refer to the Prime Minister in this debate, but one of his greatest attributes is his ability to handle complex management challenges such as this, where we’re trying to organise the broad Public Service in the most efficient way to lead to the best outcomes and to hold our chief executives to account for that. I’m working very closely with the Prime Minister on potential different designs and structures, but no decisions have been made.

CHAIRPERSON (Barbara Kuriger): Members, the Minister of Justice’s time in the chair has come to an end. We now have the Minister of Commerce and Consumer Affairs. The Minister is available to speak to that portfolio until just before 6 p.m. I give the call to Dr Parmjeet Parmar as the chair of the Economic Development, Science and Innovation Committee.

Committee of the whole House—Estimates Debate

Commerce and Consumer Affairs