PSA national secretary Fleur Fitzsimons called the spend a “total waste of taxpayers’ money” and said the Government agency should apologise.
“It should never have come to this. MBIE should have listened to the union from the very beginning instead of stonewalling for nine months and dragging workers through three rounds of failed mediation,” Fitzsimons said.
“At a time when the public service is facing cuts and job losses, burning through six figures on a losing legal battle against your own workers is deeply irresponsible,” she said.
Fitzsimons signalled this may not be the end of things: “MBIE’s replacement policy still doesn’t comply with the collective agreement. We won’t hesitate to go back to the ERA if they don’t get it right”.
In response to questions from Newstalk ZB, chief people officer Jennifer Nathan said the agency “takes its responsibilities to staff and to the careful use of public money seriously”.
Nathan explained MBIE engaged “extensively” with the PSA union about their concerns, including through three rounds of mediation, but issues “could not be resolved”.
She added the union initiated proceedings through the ERA, which MBIE engaged with.
“Alongside this, MBIE remained committed to finding a resolution and subsequently undertook full consultation on a new Flexible Working Policy and Procedures,” Nathan said.
A new flexible working policy came into force on March 30 this year – replacing the prior policy which prompted the legal tension.
Nathan said once the working from home policy had been replaced, MBIE “decided to bring the Authority proceedings to an end rather than continue litigation about a policy that was no longer in place”.
She said MBIE’s focus remains on ensuring the updated flexible working policy is applied fairly, consistently, and in good faith across the agency.
“MBIE is confident that the March 2026 policy reaches the balance of providing a Flexible by Default environment, while still meeting MBIE’s organisational needs and the Public Service Commission guidance.”
The proactively-released costings confirm the Government agency sourced legal representation externally, while also consulting MBIE’s legal, ethics, and privacy team.
The cost does not include internal MBIE staff time spent on the legal fight.
Confirmation of the spend comes during another wider period of change in the public sector, expected to cut further jobs.
The Government is expecting to save $2.4 billion in a public sector overhaul, which will cut about 8700 jobs.
Public servants are also being increasingly asked to use artificial intelligence in their work, in what the Government has suggested will find efficiencies.
Public Service Minister Paul Goldsmith has since confirmed all public agencies are expected to reduce their number of roles by 4%.
“That of course means that the larger agencies will bear the largest share,” Goldsmith said in Parliament.
Azaria Howell is a multimedia reporter working from Parliament’s press gallery. She joined NZME in 2022 and became a Newstalk ZB political reporter in late 2024, with a keen interest in public service agency reform and government spending.