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Finance Minister Nicola Willis has acknowledged that some agencies will not hit the savings targets set for them by ministers, however she said other agencies would exceed the targets set for them.

Heading into her caucus meeting on Tuesday morning said some agencies would not hit the minimum savings target set by the Government of 6.5 per cent.

“There will be agencies who will not end up reaching that target,” Willis confirmed.

She said each agency and that agency’s minister, would reach a “bespoke solution” to finding savings.

“We set an initial target then agencies came back with proposals.

“Ministers looked at those [proposals] in some cases rejected them carte blanche, sometimes they came to me and I rejected them. Sometimes we’ve looked at their proposals and said, ‘Well, why don’t you push a bit harder here and not do that?’”Willis said.

Willis did not say how many agencies would fail to meet the minimum 6.5 per cent target. She said some would be given a reprieve because ministers were not satisfied the proposals they had put up would not cut frontline services.

“Some of them [agencies] have not been able to find proposals that we can be confident wouldn’t compromise frontline services so we’re sticking to our commitment, which is this is about the back office,” Willis said.

“If you’re putting forward proposals that we think would have an undue impact on frontline services, then we’re not going to progress them,” she said.

Willis said the “good news” is that some agencies had found larger savings than they were asked for.

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One unanswered question is the extent to which Foreign Minister Winston Peters will subject the Ministry of Foreign Affairs (MFAT) to the savings exercise. Both in select committee and in Question Time, Peters has suggested he was less keen than his coalition partners to subject the agency to savings.

In February, Labour’s Foreign Affairs Spokesperson David Parker asked Peters if he had agreed to subject MFAT to find savings of 6.5 per cent. Peters did not answer that particular point but suggested MFAT’s footprint may even have to grow, saying New Zealand’s economic recovery would “depend upon our success as an export nation” and hinting more foreign aid spending may be required.

On Tuesday, Willis said she had “conversations” with Peters about how the cuts would balance two objectives: making sure New Zealand had “a great international footprint so that we can continue to be leaders in the world”, while also ensuring “back office cost” was cut out of MFAT “so that resources are really focused where they are needed”.

“The Ministry of Foreign Affairs will be making back office savings,” she said.

Willis said Peters had been “constructive” in setting out what MFAT spending was necessary for New Zealand to continue its presence abroad, while also putting up proposals for savings, in areas like contractor and consultant spend.

Willis said the outcome of the savings exercise would be published during the Budget on May 30, but ministers would continue to restrain spending.

“Wherever possible if there are dollars not going to their best use, they will be pushed to the front line,” Willis said.

The exercise is meant to save $1.5 billion a year. This figure includes the 2 per cent savings announced by the previous Government in August, and the 6.5 or 7.5 per cent cuts announced by the current Government.

Proposals to cut roughly 1000 jobs have been announced by public sector agencies. That number could rise as more agencies come forward with savings proposals, however it could also fall, should those proposals not amount to actual job losses.

Data from the Public Service Commission showed the public service increased by the equivalent of 2582 Full-Time Equivalent staff in the six months to December 2023, meaning job cuts announced to date would not unwind even six months of public sector growth.

The public service added about 16,000 jobs in the last five years.

Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.

This story was originally published on the Herald,