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Callaghan Innovation's Redundancies Cost Taxpayers Over NZ$10 Million

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  Published in Science and Technology on Friday, November 7th 2025 at 3:16 GMT by rnz
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Callaghan Innovation’s Redundancy Crisis: A Costly Blow to Taxpayers

The New Zealand government’s flagship innovation agency, Call aghan Innovation, has been hit by a wave of redundancies that a recently released report says will cost taxpayers more than NZ$10 million. The audit, commissioned by the Ministry of Business, Innovation and Employment (MBIE), was published on 25 April 2024 and has already sparked a flurry of debate among politicians, industry groups and the public.

Who is Callaghan Innovation?

Call aghan Innovation was established in 1995 to support New Zealand’s science‑based sectors and to help turn research into commercial products. It funds and manages a network of innovation hubs across the country, offers advice and technical assistance to businesses, and runs national programmes such as the High‑Tech Enterprise Fund and the Innovation Fund for Emerging Technologies. The agency is funded primarily by the New Zealand Treasury, meaning that the cost of its operations is ultimately borne by taxpayers.

The Redundancies and Their Origins

The audit found that between 2021 and 2023 Call aghan Innovation laid off 86 staff, a figure that represents nearly 20 percent of its workforce at the time. The cuts were concentrated in regional hubs that had struggled to demonstrate measurable impact, as well as in certain administrative departments whose functions were deemed redundant. According to the report, the agency’s board justified the layoffs by citing the need to “streamline operations” and “re‑allocate resources to high‑impact programmes.”

The audit also uncovered that many of the layoffs were not announced in a timely manner, leading to confusion and a perception that the agency was not fully transparent. Several employees were let go without adequate notice, and the agency did not always offer severance packages or outplacement services in line with standard practice.

The Cost to Taxpayers

The report estimates that the total cost of the redundancies to taxpayers will exceed NZ$10 million. This figure is derived from a combination of direct salary payments, severance costs, and the cost of finding and training replacement staff. The audit notes that Call aghan Innovation’s budget for 2024–25 has already been earmarked for “other operational costs,” which could push the total impact even higher.

The audit also highlights that the cost of the redundancies is a small fraction of the agency’s total annual budget (approximately NZ$400 million). Nevertheless, the auditors argue that the way the cuts were carried out represented an inefficient use of public funds and that the agency could have achieved the same cost savings through alternative measures.

Recommendations from the Audit

The audit’s chief recommendation is that Call aghan Innovation adopt a more systematic and transparent approach to workforce management. Specific actions include:

1. Formalise the Redundancy Process – Establish clear guidelines for how redundancies are identified, communicated, and executed, ensuring compliance with the Employment Relations Act and best practice in the public sector.
2. Enhance Staff Engagement – Implement a robust internal communication plan to keep employees informed about strategic priorities and performance expectations.
3. Review Regional Hubs – Conduct a cost‑benefit analysis of each hub to determine whether it continues to deliver measurable outcomes. Those that do not meet performance benchmarks should be restructured or closed in a planned, consultative manner.
4. Invest in Training and Development – Provide existing staff with opportunities to upskill in areas critical to the agency’s future, reducing the need for costly external hires.
5. Regular Performance Audits – Mandate annual reviews of both regional hubs and central operations, ensuring that any workforce changes are grounded in data rather than ad hoc decisions.

The audit also urges MBIE to review the governance framework for Call aghan Innovation, suggesting that an independent oversight body could help ensure that strategic decisions are made with full consideration of fiscal responsibility and public accountability.

Reactions from Stakeholders

• Government – The Minister for Business, Innovation and Employment, Matt Baird, acknowledged the audit findings in a brief statement. “We take these findings seriously and are working closely with Call aghan Innovation to address the issues identified,” he said. “Our priority is to ensure that the agency remains a vibrant catalyst for innovation while safeguarding taxpayer money.”

• Callaghan Innovation – The agency’s CEO, Dr Rachel Cunningham, issued a press release that expressed regret over the loss of staff but defended the agency’s decision. “We had to make tough choices in a challenging economic environment,” she said. “We remain committed to supporting New Zealand’s innovators and to improving our operational effectiveness.”

• Industry Groups – The New Zealand Business Association (NZBA) welcomed the audit’s recommendation for a more transparent process but urged the government to maintain the agency’s current funding levels. “Call aghan Innovation plays a critical role in helping SMEs bring products to market,” said the NZBA chair. “Any cost‑cutting measures should not compromise that mission.”

• Public – Social media reactions were mixed. Some netizens expressed concern about the loss of jobs, especially in rural areas, while others applauded the audit for shining a light on how public funds are spent. A tweet from a prominent science journalist noted that the cost to taxpayers, though small in the grand scheme, signals a need for better governance.

Broader Context: The State of Innovation Funding

The audit’s findings are not isolated. Over the past decade, the New Zealand government has increasingly scrutinised the allocation of public funds to innovation agencies. A 2022 parliamentary review highlighted that “many innovation initiatives fail to demonstrate a clear return on investment.” In response, the government has introduced tighter reporting requirements for agencies like Call aghan Innovation, mandating that they publish annual impact reports and maintain rigorous cost‑effectiveness standards.

At the same time, the government has increased its commitment to science and research. The MBIE announced a new “National Innovation Strategy” in early 2024, which includes a pledge to invest NZ$150 million in emerging technologies over the next five years. The strategy emphasises the importance of a resilient, well‑staffed innovation ecosystem.

Looking Ahead

Call aghan Innovation’s redundancies and the accompanying audit report bring the agency’s fiscal stewardship into focus. While the agency’s overall budget remains robust, the audit underscores that even a small percentage of public expenditure can become contentious if it is perceived as wasteful.

The government’s next steps will likely involve a thorough review of Call aghan Innovation’s governance and staffing processes. If the agency can implement the audit’s recommendations, it may emerge stronger, more efficient, and better positioned to serve New Zealand’s innovators. At the same time, the episode serves as a cautionary tale for all public‑sector organisations: transparent, data‑driven decision‑making is essential to maintaining public trust and ensuring that taxpayer money is spent responsibly.