The Government will slash the public service to roughly 55,000 workers by mid-2029, down from more than 65,000, as part of a sweeping overhaul it says will save $2.4 billion over four years.

Finance Minister Nicola Willis and Public Service Minister Paul Goldsmith announced the plan on Tuesday, saying it would reduce the number of government departments, expand the use of artificial intelligence, and redirect savings toward health, education, infrastructure, and defence.

Goldsmith said the public service grew from approximately 47,000 staff in 2017 to more than 65,000 by 2023, a rate nearly three times faster than the overall labour force.

“Between 2017 and 2023 those numbers ballooned out to about 1.2 per cent of the population,” he said. “The Government will restore public service numbers to the historic norm by mid 2029.”

That historic norm has been roughly one per cent of the population, putting the in-principle target at about 55,000.

Back-office and support roles drove much of the expansion. Government figures show administrative and support functions grew by around 46 per cent between 2017 and 2023, compared with 18 per cent growth in frontline service delivery roles.

The Government will impose a sinking lid on agency operating budgets to force progress, with staff reductions to come through digitisation, agency mergers, process simplification, and natural attrition.

Willis said the $2.4 billion in projected savings would be redeployed rather than banked.

“Every dollar saved through fixing duplication and inefficiency is a dollar that can be redirected toward improving productivity, supporting growth, and improving New Zealand’s long-term economic resilience,” she said.

The overhaul does not apply to teachers, doctors, nurses, Health New Zealand staff, police, or defence personnel.

A number of agencies are excluded from the baseline savings exercise entirely, including the New Zealand Defence Force, Police, Corrections, the Ministry of Justice, the Ministry of Education, and several intelligence and security agencies.