NZ Government Priorities for the Next 3 Months: Tax Cuts, Law and Order, Public Service Cuts

Prime Minister Christopher Luxon, continuing the trend set by the government’s ‘First Hundred Days’ plan, has set out an ambitious series of reforms.

National Party leader Christopher Luxon delivers a speech during the National Party Annual Conference at Michael Fowler Centre on June 25, 2023 in Wellington, New Zealand. Hagen Hopkins/Getty Images

Following on from its “First Hundred Days,” New Zealand’s Prime Minister Christopher Luxon has launched the government’s next action plan, setting out key steps it intends to take by June 30 across the economy, restoring law and order, and improving public services.

“There is always more to do and that’s why we are backing up the 100-Day Plan with our next action plan for New Zealand,” Mr. Luxon said.

He said the next three months would see the government focus on “rebuilding the economy and easing the cost of living, restoring law and order, and delivering better public services.”

The government aims to cut what it calls “wasteful spending” while “investing in frontline services like health, education, and police.” Initially, the spending cuts seemed like they would include the Suicide Prevention Office, but after a public outcry, Health Minister Matt Doocey said it was never more than a proposal and the office would remain open.

It is, however, going through with widely criticised limits placed on how funding could be used by the disability sector. A Facebook page on the topic has been flooded with messages from concerned carers.

All agencies have been directed to look for ways to cut back on costs by between 6.5 and 7.5 percent on average and slash the use of contractors and consultants. The Ministry of Health is proposing to slash 134 roles entirely to meet government expectations to cut spending.

Public Service Cuts

It will also proceed with cuts to public service numbers, with as many as half of the staff at some ministries set to be laid off. Those announced so far are (with total numbers as of the end of 2023):

• Ministry of Social Development (9,482 staff)—currently offering mass voluntary redundancies. The Public Service Association says hundreds of workers could be affected.
• Ministry for Primary Industries (3,767 staff)—proposing to cut approximately 231 staff (384 roles would go, but 40 percent are vacant).
• Ministry for Pacific Peoples (121 staff)—losing 63 positions, half the total complement.
• Ministry of Transport (232 staff)—has already reduced in size by 24 roles, most of which were vacant.
• Customs (1,366 staff)—33 staff have accepted voluntary redundancy or early retirement. The service is still considering further options to help meet the required savings, including reviewing existing vacancies.
• Crown Law Office (229 staff)—17 roles will be disestablished.
• Ministry for Ethnic Communities (77 staff)—has begun consultations about reducing the number of permanent staff by 14 percent and is reviewing its work out of regional offices. The Public Service Association said it was not clear how many jobs would be lost, but it understood it could be around nine.

Next week, the Department of Conservation and the Department of Internal Affairs will announce their plans for cuts, and the following week, Oranga Tamariki (Ministry for Children and Young Persons) will do the same, the Public Service Association confirmed.

The $10 banknote on display at the Reserve Bank of New Zealand in Wellington, New Zealand, on Sept. 1, 2015. Mark Tantrum/Getty Images

Spending on contractors and consultants will also need to be slashed, with many agencies laying out over $20 million annually, like Statistics NZ ($28.3 million); Conservation ($35 million); Inland Revenue ($48.7 million), and the Justice Department ($42.4 million). Defence is one of the few that didn’t make it well into to double figures, spending $9.1 million on consultants. In contrast, the highest reported spend in that category to date is by the Ministry of Business, Innovation, and Employment, at $104.4 million in addition to its 6,396 employees. That was closely followed by the Department of Internal Affairs at $122.7 million.

Mr. Luxon describes this process as “reduc[ing] wasteful spending while investing in frontline services” in his announcement. However, there are no specific commitments to frontline services in the plan, beyond some moves to help combat truancy and  “strengthening” teacher training—particularly on numeracy, literacy, and assessment.

The government says it plans to issue a new Government Policy Statement on Health, “setting the government’s priorities for the health system for the next three years.”

Tax Cuts Promised

The government is cutting spending in order to be able to deliver on its major pre-election promise, repeated in the current three-month plan: “Deliver[ing] tax relief to hardworking New Zealanders,” despite a weakening economy. That will encompass personal income tax relief, a “FamilyBoost childcare tax credit,” and a freeze on fuel tax until the end of 2026.

Other pre-election commitments reiterated in the most recent plan include restoring “Three Strikes” for serious repeat offenders, and establishing a Regional Infrastructure Fund, both demanded by National’s coalition partners. Rehabilitation, reintegration, and safety outcomes in the corrections system will be improved, including by extending eligibility for offence-based rehabilitation programmes to remand prisoners.

Farmers will be pleased to hear the government intends to finalise policy to keep agriculture out of the Emissions Trading Scheme, and will commence an independent review of methane science and “targets for consistency with no additional warming from agricultural methane emissions.”

It looks set to allow the return of mining, promising to “take decisions on the removal of the ban on offshore oil and gas exploration” and will commission a study into New Zealand’s fuel security, “including investigating the feasibility of reopening the Marsden Point Oil Refinery.”