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Wellington residents and business owners are increasingly worried about the government’s planned public sector cuts, with concerns the capital could face significant economic and social consequences if thousands of jobs are lost over the next few years.
The government plans to reduce the public service workforce by 14 percent by mid-2029, cutting around 8700 jobs nationwide to save approximately $2.4 billion. The proposal also includes merging several ministries and reducing operating budgets across most government agencies.
Economists believe Wellington will experience the largest impact because of its strong reliance on public sector employment. Nick Brunsdon, principal economist at Infometrics, estimated that more than 3500 jobs could disappear in Wellington alone.
According to Brunsdon, Wellington has more than 27,000 core public service workers, excluding frontline roles in health and education. Applying the government’s proposed cuts to that workforce could result in roughly 3700 job losses in the capital.
He said the impact on Wellington would be much greater than in other regions, with the cuts representing around 1.3 percent of all jobs in the city. In comparison, most other parts of New Zealand would see reductions of less than 0.3 percent.
Brunsdon explained that around 42 percent of New Zealand’s public servants are based in Wellington, making the city particularly vulnerable to changes in government spending. While he said it was important to ensure the public service delivered value for taxpayers, he questioned whether broad budget cuts across agencies would achieve the best long-term outcomes.
Finance Minister Nicola Willis said the changes would be introduced gradually over several years and stressed it was too early to know exactly where the reductions would occur. She argued New Zealand’s labour market remained active, with many jobs created every quarter.
However, many business owners in central Wellington fear the cuts will further damage the city’s struggling economy.
Kirsten Saunders, co-owner of Smith the Grocer Cafe on Lambton Quay, said previous rounds of public sector job cuts had already significantly reduced foot traffic and customer spending.
She said many public servants visiting her cafe were stressed about restructures and uncertain job prospects. Recruitment consultants had also told her there were limited employment opportunities available for those losing work.
Saunders believes Wellington has not yet recovered from its recent economic slowdown and said households are already spending less. She criticised the government’s approach, saying she would like to see more compassion for workers and businesses affected by the changes.
Wellington resident Tracy Day said she feared the city could become a “ghost town” if more public servants leave. She worried empty shops, rising costs, and declining morale could push more people away from the capital.
Business owners have also raised concerns about survival. Sagar Sharma, owner of Annexe Cafe and Cafe Coffee Station, said he had already reduced staff numbers by about 30 percent over the past two years because of public sector cuts and the increase in remote working.
He said customer numbers in central Wellington had dropped sharply and doubted his businesses could continue operating if thousands more jobs disappeared.
Some business owners are trying to stay optimistic despite the uncertainty. Mia Tracey, owner of Dough Bakery, Slice and Pickle, and Pie, said businesses needed to remain positive and focus on adapting to changing conditions. She added that the reopening of the city library could help bring more people back into the CBD.
Government ministers have rejected suggestions Wellington relies solely on the public sector. Finance Minister Nicola Willis and senior minister Chris Bishop said the capital also has strong technology, film, and innovation industries that can support future growth.
Wellington Mayor Andrew Little acknowledged the anxiety surrounding the proposed cuts but said the city’s growing technology sector could provide resilience. He confirmed he would speak with government ministers about the likely impact on Wellington businesses and residents as uncertainty continues to grow.
-TIN Bureau