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Prime Minister Christopher Luxon has cut the amount ministers can spend on taxpayer-funded cars and will not get one for himself as the focus goes on the Government’s cost-saving demands across the public sector.

Luxon’s office said he had cut the cap on ministers’ self-drive cars from $85,000 to $70,000, but had otherwise not changed the criteria for ministers who take up the entitlement to a car. A spokesman confirmed Luxon would not be taking the entitlement himself.

Former PM Jacinda Ardern had required ministers to order electric vehicles unless they got an exemption – such as for those in large, rural electorates.

The approved cars under Ardern included the Hyundai Kona EV, Hyundai Ioniq EV, MG ZS EV, Nissan Leaf EV and Mitsubishi Outlander PHEV. It is understood ministers were told not to get Teslas.

It is not known whether Luxon has made the same stipulation about Teslas – although only the cheaper models would be under the new $70,000 cap.

All ministers and the Leader of the Opposition are entitled to taxpayer-funded cars for their own use. The Prime Minister sets the spending cap and can also set other standards, such as emissions and safety.

When he was in Opposition, Luxon did not take up the entitlement. The NZ Herald reported in June that at one point he ordered a Tesla but subsequently cancelled it. At the time, Luxon was criticising the Labour Government’s subsidies for Teslas through the Clean Car Discount Scheme. National has since scrapped that scheme.

Not all ministers take up the option of the self-drive car. Act leader David Seymour said he would not be doing so because he did not need one. Labour leader Chris Hipkins has kept the car he had when he was Prime Minister.

Government departments have been asked to find cuts of 6.5 per cent or 7.5 per cent. Luxon said his own agencies – the Department of Prime Minister and Cabinet and Ministerial Services – were not exempt from the cost-saving drive.

However, his introductory briefing from Ministerial Services pointed to some significant looming costs, including the need to upgrade Premier House and the “immediate priority” of replacing the BMW sedans in the Crown car fleet, the chauffeur-driven service for ministers. It also pointed to other costs, including a 25 per cent increase in the costs of international travel since before Covid-19.

It said it would work on finding cost-savings - but warned it could come with trade-offs.

“This includes identifying potential efficiencies and savings that can help manage rising and new costs within portfolio baselines. In some cases, options for reducing costs within the portfolio may require trade-offs in service levels or entitlements for Ministers and other VIPs.”

The report said the Crown car sedans had been used since 2016 and were due for replacement. A plan to do that gradually from 2019 stalled because of Covid-19, when supply chain problems meant there were no suitable options. Cyclone Gabrielle made the department reassess the mix of electric and petrol cars in the fleet to ensure there were enough cars in the event of a disaster disrupting electricity supplies.

Luxon’s office said no decisions had yet been made on the Crown car replacements. It would not release the independent report on Premier House, saying decisions were yet to be made about it. Luxon has not yet moved into Premier House, instead staying in his Wellington apartment.

He was asked about ministers’ spending after meeting public sector heads on Monday night, later saying he had told them that efforts to find cost savings were not a one-off exercise and department heads would have to be “ruthless in prioritisation”.

“We will be working to make as much savings as we possibly can in my departments as well.”

Luxon said all government agencies would be required to deliver savings.

Cost-saving proposals were coming through, including trimming the use of consultants and contractors. The aim was to cut those numbers by a quarter, saving $400 million.

Luxon defended the Government’s decision to set up a technical advisory group on its three waters proposals, saying it was appropriate to use consultants in some situations where specialist advice was needed.

The Government would work its way through the proposals and outline them in the Budget in May.