Health New Zealand’s cost-cutting drive led to $57.9m in redundancy payments, PSA says

Health New Zealand spent $57.9 million on voluntary redundancies and early staff exits over the past two years, according to a new report by the Public Service Association (PSA), as the government pushes ahead with cost-cutting reforms across the health sector.

The union said government data it obtained showed nearly 2,800 non-clinical workers left the organisation between 1 November 2023 and 31 December 2025. The payments covered voluntary redundancies and early exit packages for staff including administrators, public health analysts and IT specialists.

Fleur Fitzsimons, national secretary of the PSA Te Pūkenga Here Tikanga Mahi, said the departures reflected what she described as a politically driven cost-reduction strategy.

“Bottom line, the government forced Health NZ to spend money it didn’t have to axe workers it needed to keep the system functioning well for all New Zealanders,” she said.

The PSA, which represents around 17,000 health workers nationwide, argued that the financial cost tells only part of the story. Fitzsimons said the loss of experienced staff could lead to operational strain, including IT disruptions, longer waiting times and clinicians taking on additional administrative tasks.

“This is a shameful indictment of the government’s reckless approach to cost-cutting coming at a time of a health funding crisis,” she said. “There is a high price to pay for losing these public health workers.”

The report lands as the government intensifies its focus on frontline healthcare delivery and reducing what it has termed “unnecessary bureaucracy”. In a Letter of Expectation issued in November 2025, Health Minister Simeon Brown instructed Health NZ to devolve decision-making to its four regions and 20 districts.

“I expect Health New Zealand to rapidly devolve decision-making… so they can get on with what they do best – delivering healthcare to patients,” Brown said at the time, adding that reducing bureaucracy and improving recruitment timelines for clinical roles would lead to faster, better patient outcomes.

The figures highlight the tension between fiscal restraint and system capacity, as policymakers seek to streamline administration while unions warn of knock-on effects for frontline services.

Health NZ has not publicly detailed how the reduction in non-clinical roles will affect operational performance in the medium term. However, workforce planning and digital resilience are likely to face scrutiny as reforms continue.

With the health system already under funding pressure, the debate over where efficiencies can be found — and at what cost — is expected to intensify in the months ahead.