It’s not just the core government departments that will be slashing costs and handing out pink slips to staff. The Government wants the boards of its Crown-owned businesses to read the room, and do the same.
It comes as Finance Minister Nicola Willis announces plans to cut public service jobs by about 14 percent over the next three years, in restructuring she says will deliver $2.4 billion of savings.
Newsroom has asked Willis if shareholding ministers will also be writing to Crown companies and state-owned enterprises and asking them to reduce their staffing levels, or to increase their return on equity.
“Yeah, great question,” she replies. “We will be asking ministers who are responsible for the boards of those Crown entities to take that step to ask them to reflect on the Government’s overall objectives in terms of value for money and head count and digital transformation, and ensuring that our expectations are made clear in that way through ministerial accountability, and we do expect Crown entities to be on board the bus.”
Crown companies and state-owned enterprises aren’t funded out of the public purse, on the most part. Instead, they’re expected to compete commercially, turn a buck and return a dividend to the Crown coffers. For some, that’s a rare occurrence.
Crown entities operating commercially include TVNZ, Kiwibank, Public Trust, Crown Irrigation Investments Ltd, Education Payroll Ltd, Crown Infrastructure Delivery Ltd; and until it’s finally wound up, NZ Green Investment Finance Ltd.
Willis left all these businesses untouched in the 2024 cuts to departmental baselines, though some read the ministerial mood and made cuts voluntarily. Now, they’re getting the hard word to follow the example of the core public sector.
Some are pushing back a little, reading between the lines. “Kiwibank already operates under clear expectations from shareholder ministers to run a disciplined, high performing business, including managing costs and delivering value for Kiwi,” says the bank’s chair, David McLean.
‘The overall return on state entities is abysmal for the debt that the Government is carrying and paying rising interest rates on.’
David Seymour, Associate Finance Minister
Act leader David Seymour has argued that the Government should sell off some off these businesses, like Kiwibank, Pamū Landcorp Farms, and QV – businesses he doesn’t regard as critical infrastructure, if they ever were.
He tells Newsroom: “The overall return on state entities is abysmal for the debt that the Government is carrying and paying rising interest rates on.”
“The Government writes to these guys every year, saying ‘we’d like you to make a return to the Crown. That’s one of your reasons for existing’. I have to say, it seems that writing them letters hasn’t been an especially effective strategy for doing that.”
He gives the example of Kiwibank. “It was set up in the belief that having a fifth bank, New Zealand-owned, would somehow disrupt the market and get consumers a better deal. I don’t think anyone believes that it has succeeded at its mission.”
Some would like to see it sold off, others believe the Crown needs to put more capital into it, to help it scale up and take on the big banks. This Government has ruled out privatising it, “but you have to ask yourself, are New Zealanders content to just keep doing what we’re doing and accept this is as good as it gets? Or do we need to revise some of our assumptions?”
As Associate Finance Minister, he is shareholding minister for many of the Crown entities and SOEs, including TVNZ.
The publicly-owned broadcaster cut 49 staff in 2024, and shut down Fair Go, Sunday and its midday and late-night news bulletins, as well as cutting Shortland St to three nights a week. This was driven less by ministerial prodding than by the parlous state of its books, amid a collapse in broadcast advertising revenues.
“I think the board would argue that they are in the middle of a digitisation project that will improve their returns in the long term, as they transition from linear TV to being a digital platform,” Seymour says. “Whether or not they will succeed at that, I guess, is something that taxpayers just have to hope and pray for.”
TVNZ says it hasn’t yet received a letter from Seymour. “We have not taken steps to reduce staff levels this year,” says spokesperson Rachel Howard.
“As a commercial business, we regularly review our cost base and resourcing to ensure we operate efficiently though. Our focus remains on investing in our digital platforms, delivering content audiences value, and running a profitable business that can return dividends to the Crown as we have demonstrated in our recent full year and interim results.”
At Crown Infrastructure Delivery, a government-owned company spun out of the Christchurch rebuild projects, chief executive John O’Hagan says the board receives formal letters of expectations from its shareholding ministers.
“In recent times, expectations around the Government’s books and the need for fiscal discipline, including a focus on resourcing and controlling and minimising costs, have been very clear,” O’Hagan says. “Crown Infrastructure Delivery has, and continues to, meet our shareholders’ expectations.”
State-owned enterprises – which have a greater degree of operational independence – include KiwiRail, NZ Post, Transpower, Kordia, Pāmu Landcorp Farming, QV, Airways Corporation; and AsureQuality.
As far as these go, ministers are pretty much limited to sending their annual letter of expectations that generally talks about what the business delivers, rather than how it operates.
At NZ Post, chief executive David Walsh says he’s clear on the need to sustain a strong commercial performance while maintaining an efficient and reliable service for New Zealanders, and the company has have made significant changes in recent years to achieve that.
The business did a restructure in the last 2025 financial year, and continues to have a strong focus on managing costs across all areas of the business. They’re trying to increase the company’s revenue from parcels, even as they manage the continued decline in mail.
“To be efficient and cost-effective, NZ Post needs to operate with flexibility,” Walsh says.
That was the focus of the most recent review and update of the Deed of Understanding, completed in October 2025, that sets out the minimum requirements that NZ Post must meet.
The minimum number of NZ Post stores hadn’t changed since 1989 – but’s about to. Walsh signals some stores will close.
“We are now making changes to ensure we have the right number of stores, offering the right services, in the right locations to reflect how customers are using NZ Post today,” he says. “While these decisions are difficult, they are necessary to ensure the long-term sustainability of postal services.”
KiwiRail chief executive Peter Reidy emphasises that state-owned enterprises are required to operate as successful businesses, including meeting the specific objective of being as profitable and efficient as a comparable business not owned by the Crown.
The company’s total workforce has reduced from 4900 in mid 2024 (when Willis kicked off the last public sector cuts) to 4500 at the end of 2025 – and the company will be reporting further reductions in its annual report, Reidy says.
Value for money, lowest cost operational excellence and adopting digital innovations are all already at the heart of the tail company’s strategy for the coming year. KiwiRail is two years into a strategic reset. “That includes ensuring we have an appropriately-sized workforce for the services and infrastructure we deliver and maintain.”
Transpower chief executive James Kilty says that business is focused on spending carefully and getting the most it can from the assets it already has, to help keep costs down for Kiwi consumers. “We know value for money matters to Government, and it matters to us too.”
He cites Transpower’s $63m programme to add 20 years to the life expectancy of a critical circuit in the inter-island high voltage cable. He says that’s deferred close to $1b in replacement costs: “That is a substantial saving for consumers, and it shows the kind of disciplined decisions we are making.”
But he warns that strong global demand is pushing up the cost of electrification-related resources and increasing investment pressure right across the grid. Transpower’s cost base is driven much more by capital investment than by headcount.
“While our staffing has increased in recent years, that reflects the scale of work now required to maintain, refurbish and expand New Zealand’s electricity transmission grid,” he adds. “A lot of that investment is going into assets that were built in the 1950s, 60s and 70s and are now reaching the end of their useful life. If we put that work off, the risk of outages goes up and the cost of fixing problems later only gets higher.”
At the state-owned enterprise Pāmu Landcorp, chair John Rae says management reviews its costs regularly as part of running a commercial farming business. They’re focused on lifting productivity and maintaining disciplined spending across the business.
Pāmu paid $25m in dividends to the Crown in the 2025/26 financial year, including a $10m special dividend in last month.
“As a state-owned enterprise, Pāmu operates on a commercial basis. We generate our own revenue and return value to the Crown through dividends, rather than receiving taxpayer funding,” he adds. “Our focus is on running a high-performing business while delivering to shareholder expectations. We received our latest letter of expectations from shareholding Ministers in March, and these expectations are reflected in our planning.”
There are some Crown businesses that are specifically excluded from the cost-cutting imperative, Willis says. These are the mixed ownership model companies, majority owned by the Crown and the balance listed on the sharemarket.
“It’s important to remember they are not Crown entities, they are mixed ownership model companies who are listed on the New Zealand stock exchange,” Willis tells Newsroom. “The government already sets clear expectations for them, both through statute and through our expectations of commercial return within the parameters that we set.”
Foremost among these is Air NZ, which is forecasting a loss of up to $390m this year and is highly unlikely to be paying a dividend to the Crown or other shareholders.
Then there are three electricity gentailers: Genesis, Mercury and Meridian. These are cash cows for the Government, delivering $564m in dividends last year. The Government is also relying on them to invest in new thermal and renewable energy, so will be loath to cut into their finances.
