Infometrics principal economist Nick Brunsdon said that means the capital “is likely to bear the brunt” of the cuts.
“We’ve already seen cuts to the public service come through in Wellington [and] we’ve seen what that’s done to the region’s economy,” Brunsdon said.
“The Wellington region as a whole has been sort of towards the bottom of the table for at least the past year because of these public sector cuts and that sort of malaise that we’re seeing.
“I expect it would sort of keep Wellington at the bottom of the pack in terms of things like economic activity, in terms of consumer spending, employment and the like,” he said today.
Since 2023 there had been a “steep outflow” of people moving overseas from the region, he said.
“It seems that people once they lost their job just sort of hit the road and left, and I’d expect a bit more of that to happen if we see further job cuts.”
Infometrics senior economist Nick Brunsdon says Wellington will likely bear the brunt of the planned public sector reforms.
Repeated economic figures have shown Wellington floundering near the bottom of the economic scoreboard, despite the rest of the country starting to bounce back.
“I think it certainly would put off the economic recovery,” Brunsdon said.
With government departments headquartered in the capital and the public sector making up 23% of all jobs in Wellington, Brunsdon said cuts to the back-room, administrative functions of the sector would “disproportionately” impact the city and wider area over other regions.
It is not only the public sector at risk, he said, with professional services and consultancy fields also vulnerable when government spending cuts are implemented.
Data from earlier this year showed Wellington had lost nearly 10,000 jobs across the public and private sectors since the last election.
“If we look at what happened between 2024 and 2025 in Wellington, it was actually professional services, administrative services, consultancies and HR agencies [that] bore the brunt much more so than actual directly employed public sector jobs,“ Brunsdon said.
Early estimates suggested the reform could result in around 3700 jobs being lost in the capital, but Brunsdon said the real figure “could potentially be higher if they really do preserve those frontline jobs in the regions and hone that hit on Wellington”.
Reforms both a concern and opportunity – Mayor Andrew Little
Speaking after the minister’s announcement today, Wellington Mayor Andrew Little said because the city was home of the public service, the news “inevitably causes anxiety to a lot of people in Wellington”.
Taking an optimistic approach, he suggested Wellington could play to its strengths in the tech and AI sectors to benefit from the reforms.
“If the Government is keen to partner with the city on delivering good technology for the future of the public service, this is the right city to do it with, and it’d be good to see if there’s an opportunity to do that,” Little told reporters today.
He said it was too early to know the impact it could have on the city’s economy, “but you’d have to figure that there will be more job losses in Wellington”.
Wellington Mayor Andrew Little says Wellington could play to its strengths in the tech and AI sectors to benefit from the reforms. Photo / Mark Mitchell
“That won’t just concern those working in the public service, but it’ll concern businesses, particularly retail and hospitality, who depend on at least in part on those folks being part of their foot traffic and buying from their businesses.”
Little said he had not spoken with Willis about the plans, but would be seeking a meeting “in due course”.
He would not say whether he agreed with the Government’s view that the public sector had become bloated.
“This Government’s got its view about what it thinks is the problem, what needs to happen, I’ve got to deal with the consequences of that with the community that I represent.”
Ethan Manera is a Wellington-based journalist covering Wellington issues, local politics and business in the capital. He can be emailed at ethan.manera@nzme.co.nz.