Public Service Commissioner says there's need for fewer agencies in previously unseen letter

A previously unseen letter from the Public Service Commissioner discusses reducing the number of Government agencies to between 15 to 20.

But both Sir Brian Roche and the Public Service Minister are clarifying no decisions have been made yet.
It comes as the Government has been working towards a public service headcount reduction target of 55,000 fulltime-equivalent roles by July 2029, as announced before Budget 2026.

The just-released document from August 2025 shows Roche wrote to then-Public Service Minister Judith Collins saying “we need to move towards fewer agencies (42 down to 15-20), underpinned by common technology and a lot more AI”.

In the letter, the commissioner said it would take around three to five years, and would deliver better services for lower cost, with fewer public servants.

“This is not making more MBIEs – in fact we will be shrinking MBIE, and as Commissioner this is what you have asked me to do. I will front it and I will defend it because I think it is the right thing to do.”

Roche promised he would front the proposal, saying although there will be “noise” many people/groups will see its merit and support it.

“The individual consolidations where we have the most urgent need (eg the population agencies) might generate noise but they are necessary and I will strongly defend that,” the Commissioner wrote.

In a statement, the commissioner told Newstalk ZB there have been no decisions made on the number of agencies or any timelines.

“The State of the Public Service Report highlighted the need for a public service with fewer, more effective agencies that are better placed to take advantage of digital opportunities. This remains our direction of travel,” he said.
Current Public Service Minister Paul Goldsmith said the detail of reductions will be worked through by chief executives and are subject to Cabinet approval.

“New Zealanders expect a public service that grows smarter, not simply larger. Our government is acting,” Goldsmith said.

He said the Government wants to ensure it’s investing in a high-quality public service that’s modern, productive and financially sustainable over the long term.

“Through careful thought, this overhaul will reduce the number of government departments, increase the use of AI and other digital tools, and deliver significant savings.”

Public Service Association national secretary Fleur Fitzsimons described the letter as “short term, reckless thinking” as it did not contain analysis that shows 15-20 agencies would deliver better services.

“The commission is totally underestimating the complexity of this task and thinking it can achieve this within five years, including the amount of legislation needed. At a time of rising pressure on agencies from an ageing population, climate change and our infrastructure challenges, this will be a massive distraction, and risks the Government dropping the ball on our pressing problems.”

Fitzsimons said to say AI will help drive efficiencies was “naive and irresponsible”.

“AI is not going to help maintain our Great Walks or guide a person with complex needs through the support they require.”

Documents prepared by the Public Service Commission show officials highlighted four potential options for hitting the Government’s public sector reduction target, all of which were over the cap.

Officials said potential options were reducing to 60,000 FTEs or reducing to 57,400 FTEs – but noted the latter “would entail risks to frontline services”.

They told Paul Goldsmith reducing the cap to 55,000 by July 2029 “could exacerbate risks to public service performance”.

The Public Service Commission also recommended extending the timeframe to June 2031 if the Government favoured the lower cap. It did not accept that recommendation.

A separate aide memoire from late April 2026 on modernising the public service, sent to Minister Goldsmith from the Public Service Commission, said departments would be merged “where it makes sense”.

Finance Minister Nicola Willis has previously told Newstalk ZB she’d like to see the number of Government agencies New Zealand has in the 20s.

The Act Party has been campaigning on reducing the number of agencies to 19 “coherent departments”.

Leader David Seymour has described the Government as “oversized” and “expensive”.