MBIE scraps $27 Christmas party subsidies amid spending cuts, voluntary redundancies investigated

One of the country’s largest ministries is canning its $27-a-head subsidy for Christmas parties as part of broader spending cuts set to intensify under the incoming National-led Government.

The Ministry of Business, Innovation and Employment, which has more than 6500 staff across the country, confirmed today it was scrapping the end of year function subsidy and reducing discretionary spending by 15 per cent with “immediate effect”.

MBIE chief executive Carolyn Tremain said the measures were a response to a request from the Labour Government to cut spending by $110 million, or 2 per cent, and did not reflect anything from the incoming National-led Government.

Both National and Act have signalled major cuts at MBIE, which is responsible for a vast array of services including immigration, with the latter saying it wants to halve the workforce, which numbered 6533 as of September.

The parties have both talked openly about public service cuts across the board, regularly criticising what they called a “bloated bureaucracy” and examples of “wasteful spending”.

The public service cuts are critical to National’s tax cut plans.

The revelation came after Stuff reported a leaked email today from Tremain to staff outlining the changes.

Tremain told the Herald the current measures came after the Labour Government in August announced plans to permanently reduce public service baseline costs.

“This identified savings that MBIE would be asked to make this financial year of approximately $110m, or 2 per cent,” she said.

Tremain said they had been working on a “range of things” to cut costs while still effectively delivering services.

“We have been communicating a range of things with our people, including this work, and information to keep them informed of their role as public servants during the election period.

“As part of updating our people on this, we shared MBIE’s decision not to provide the end-of-year function subsidy this year and that we are reducing discretionary spending by 15 per cent with immediate effect.”

The “discretionary” end of year subsidy was previously up to $27.50 per head for staff.

It is not always taken up by all staff, with last year’s end of year functions coming to a total cost of $80,575.

Tremain said they were also looking at voluntary redundancy options but confirmed there had been no recruitment freeze.

“We are being mindful of some recruitment, looking at where some vacancies could be closed and pausing filling some roles.

“We are also exploring updating MBIE’s change management toolkit to look at the inclusion of a possible voluntary redundancy process, but no decisions have been made in this area.

“This work to date has been based on the targets and expectations set by the current Government. We will have conversations with the new Government when it is formed on how we have worked to date to achieve the fiscal savings target.”

She also said MBIE had not made any changes regarding Māori initiatives nor use of te reo Māori, areas which all three parties likely to be in the new government have signalled changes.

National Party leader Christopher Luxon told Newshub it was “good” to see the cuts at MBIE. National’s tax policy document identifies MBIE as one of the public agencies it will be looking to make cuts at, totalling 6.5 per cent from what it calls “non-core and frontline agencies”, with spending there growing 67 per cent between 2018 and 2023, from $750m to just over $1.2 billion.

During the election campaign Luxon declined to say exactly where nor how those cuts would occur, simply stating it would be up to the CEOs.

“I think it’s good that the CEO is registering to be responsible with money and that’s coming actually from the current government who also issued cost savings across the public service and that’s very much where that’s coming from,” he told Newshub today.

On Christmas parties being scrapped, Luxon said that was up to CEOs to decide.