And here we are again. Well here you are, I’m actually in Fiji, but regardless; the government announced this week that it’s cutting nearly 9,000 public sector jobs over the next three years. Finance Minister Nicola Willis framed it as a modernisation story: fewer silos, more AI, $2.4 billion in annual savings. Thia is of course the usual election year chat. Willis is an interesting character. She gives off a “2006 high-billing contract recruiter” vibe to me. And is equally unlikeable. This policy will have been designed to win votes in Auckland and the provinces in an election year. It’s a ballsy move, which hammers the Wellingtonian voter base (who don’t like her anyway) to garner support from Murray on the dairy farm, and middle-class middle-managers up here in Auckland.
Currently, the capital hosts 43.6% of all public servants. That’s 27,677 full-time roles sitting in one city. A city with one economy, one property market. When the cuts land, they won’t be spread evenly across the country like a light autumnal drizzle. They’ll fall on Wellington like…rain in Wellington. And unfortunately for the city, it’s still recovering from the last round. Unemployment in the central Wellington area hit 5.1% in the year to December 2025, up from 4.7% the year before, while spending in the capital fell 2.8% against a national decline of just 1%. The city was just starting to find its feet again. Then came Tuesday.
I say “here we are again”, but maybe it’s worse. When National ran similar cuts between 2007 and 2017, agencies found a workaround. The headcount drop led to contractor opportunity. This made the government look good, but the spend didn’t change. You could still scrape a living if you had a contractor book. This time, the government is trying to close both doors simultaneously. Public service spending on contractors and consultants already fell 35% from $940 million to $611 million in 2024/25, with a hard cap now in place for 2025/26 across the public sector. So the usual escape hatch for recruitment agencies, IT firms, and “management consultancies” (who are actually just recruitment firms) that built revenue models around government work? Gone. The pool is structurally smaller and staying that way. The good times are officially over. For a long f*cking time.
And as much as public servants annoy us all (I’m not on AoG so I can say that), central government has been the anchor employer in Welly for two decades. Entire ecosystems of cafes, bars, nightclubs, strip clubs, commercial property, and the kaftan and pounamu retail industry exist because public servants show up, poorly dressed, on Lambton Quay five days a week. You can’t rip out 14% of the sector’s workforce and have the local economy just…diversify on cue. That’s not how cities work. There are currently just over 63,000 full-time public servants, down slightly from a high of around 65,000 in 2024/25. The target is 55,000 by July 2029. And it’ll be capped at that – no matter what the world throws at us.
9,000 people don’t vanish. They’ll hit the job market, mostly in Wellington, mostly at the same time, mostly competing for a smaller pool of private sector roles in a city whose economy is contracting partly because of the same cuts displacing them. Smaller begets smaller. The public sector is a drain, but the cash then moves freely throughout the economy. We love this. As for the workers, some will retrain, some will move to Auckland or Australia, and some will land on their feet quickly. But the aggregate effect on Wellington’s labour market, property market, and consumer spending is not good. Anyone telling you otherwise is either not looking at the numbers or, heaven forbid, is more concerned about winning an election.
I know I’m a raving socialist, but I can appreciate the need for improving process and removing duplication. Forty-three government departments and ministries, 82 ministerial portfolios, all reinventing the wheel is stupid. I bang on often about the irresistible, unstoppable march of AI. It is taking our jobs people. However, the cure being applied is blunt, fast, and heavily concentrated in one city that’s already under the pump. And it’s being done so that we vote for a particular party. We Brits have a rich background in closing down industries overnight. Close the mines, close the car plants, buy it from overseas. Made sense at the time. Doesn’t make sense when we look back now. Saving some pennies in an election year might look good, but not if you’re a government worker, a cafe owner, or living close to negative equity. And it’s certainly not good for us recruiters – but it never is these days.
^SW
