Public sector cuts: Potential savings to be made with HR, payroll, technology shake-up

Author: Azaria Howell,
Publish Date: Tue, 26 May 2026, 5:00am

Significant cost-savings are set to be made through potential cuts to human resources, legal services, technology, and payroll systems, as the Government eyes up reducing duplication.

A briefing to new Public Service Minister Paul Goldsmith, prepared and proactively-released by the Public Service Commission, raised various areas of change in the sector.

Goldsmith was told there were opportunities for a “unified” public service that focuses on outcomes, being “more connected” and being “fiscally sustainable”.

The briefing stated an all-of-Government procurement panel for human resources and payroll systems will soon be launched to establish agreed suppliers for Government agencies.

The document added this makes up part of an initiative to “standardise and streamline back-office systems” - expected to save $160 million over the next decade by “de-duplicating” legal, procurement, configuration, and other costs.

Finance Minister Nicola Willis has previously pointed to HR departments as a potential area to cut spending.

“As much as possible, I’d like one centralised system that everyone’s working from instead of duplicating and reinventing the wheel across multiple departments,” Willis told Newstalk ZB earlier this month.

The Government is aiming to reduce the number of departments, increase AI use, and impose a headcount target on the public sector as part of an overall drive for $2.4 billion of savings over the next five years.

Technology appears to be a significant focus going forward. In the briefing, officials stated Government agency digital ‘clusters’ are set to be established to share information and technology platforms.

The briefing said it would take shape in the form of “logical groupings of agencies” sharing different categories of

ICT systems and digital services, rather than having their own.

Goldsmith was told the private sector would play a “key role” in delivering a new digital direction, including plans to further use artificial intelligence, and plans to roll out “digital public infrastructure” like a Government app.

A target has been imposed to have 10 digital agency clusters underway by June 2028, as well as issuing four million digital identity credentials, and having two million downloads of the Government app.

“Digital can enable government to operate more efficiently as a system and to deliver joined-up, worldclass digital government services,” officials said.

Technological changes, including through “more efficiently structuring Government” are tipped to deliver significant cost savings.

The briefing stated multi-agency technology solutions may cost more or take longer in the short term, but “will deliver clear benefits and savings for government as a whole”.

By mid-2028, the Government forecasts potential savings between $200 million and $330 million as a result of the technology services shake-up.

“By the endof year seven, these forecast cumulative savings rise to between $2.3 and $3.7 billion, rising to between $3.7 and $5.9 billion by the end of year ten,” the briefing stated.

Public Service Commission officials also discussed potential work on the “revolving door” between certain sectors and the Government - in what it called an “ethical transitions” discussion document.

The Commission has committed, with the Ministry of Justice, to producing a document exploring the “movement of individuals (elected and non-elected) between government and private sector roles (often known as the “revolving door” phenomenon) and identify potential options to support individuals to make this transition."

The PSC said it would provide more advice on the matter.

Azaria Howell is a multimedia reporter working from Parliament’s press gallery. She joined NZME in 2022 and became a Newstalk ZB political reporter in late 2024, with a keen interest in public service agency reform and government spending.