Inland Revenue faces potential job cuts as budget set to shrink 20% by 2028/29

New Zealand’s Inland Revenue has warned staff that further job cuts may be considered as the agency prepares to operate within a significantly reduced budget over the coming years.

An intranet message to staff from Inland Revenue chief executive Peter Mersi said the agency would need to “operate within a 20% reduction to our baseline budget in 2028/29” as it works to deliver savings across multiple financial years.

The agency said it would need to consider reductions in workforce numbers alongside other costs, while some activities could be stopped or made more efficient.

Workforce reductions considered

Inland Revenue is among Government agencies required to reduce baseline spending by 2% this year, followed by 5% reductions in 2027/28 and 2028/29.

The Public Service Association Te Pūkenga Here Tikanga Mahi said the potential cuts have put more than 4,000 Inland Revenue employees under pressure.

PSA national secretary Duane Leo said it means IRD’s more than 4000 staff are “now all working under threat of losing their jobs”.

The union has called for a public good test before Government agencies begin what it describes as “major restructures”.

“The prospect of further budget reductions and potential job losses is creating significant concern for members. Many are questioning how Inland Revenue can continue to meet increasing expectations while reducing both funding and staffing levels,” Leo added.

Agency plans savings

Inland Revenue said the potential reductions form part of the Government’s Budget 2026 requirements for agencies to identify savings over the coming years.

The agency said staff had been updated on its work to identify efficiencies and reduce costs while continuing to operate within future annual baseline budgets.

“Baselines are reducing by 12% and to meet inflationary pressures, costs will need to reduce by 20% by 2028/29. We are beginning planning on how we meet this and no decisions have been made yet,” the agency said.

The agency has not announced specific job cuts or restructuring decisions at this stage.

Unions kept informed

Inland Revenue said it had committed to maintaining transparency with staff throughout the process and would continue briefing unions on its plans where appropriate.

“While change can be unsettling, IR staff are dedicated to continuing delivering the important work we do for New Zealand,” the agency said.

The potential workforce reductions come as public sector agencies face sustained pressure to reduce spending while maintaining the delivery of essential government services.