Is the plan to be meaningful or is it just a political gesture? Not since the days of Sir Robert Muldoon's state department cost-cutting threats in the late 1970s has the public service faced the challenge proposed by the Key Government.
They are different proposals in style and extent from the wholesale reorganisation and privatisation of the Rogernomics years.
Sir Robert wanted to save money by having the state departments cut back on their spending, and were then required to make predetermined reductions.
Their response was to offer to surrender numerous projects favoured by the public which, had they proceeded, would have amounted to political disaster for an already unpopular government.
The work of the ironically named officials committee, "COPE", and other agencies eventually resulted in a sinking lid on the public service together with an annual staffing reduction of 1.5% - and no new programmes or staff hirings without Cabinet approval.
The Key Government is taking a subtler line, requiring departments and agencies within the State's embrace to live within their budgets, but also proposing efficiencies and cost savings by mergers.
It has not taken long for the howls of anguish to emerge, notably from the broadcasting services.
TVNZ, with its endless diet of lowest common denominator imported light entertainment, is now proposing to abandon any pretence at free-to-air regional programming by operating a so-called "Heartland" channel featuring New Zealand programming - but only on subscriber television.
And non-commercial state broadcaster Radio New Zealand, faced with being required to continue operating within its existing budget, complains over the heads of the politicians to its listeners that "sponsorship" and even commercial advertising might be needed to continue transmitting to its minority audiences.
The Prime Minister has said we have more state agencies than we need, and few would disagree on the basis of the raw data: this country of just 4.3 million people has 41 departments and ministries, 84 statutory Crown entities, 11 Crown entity companies, 17 state-owned enterprises, 31 tertiary education institutions and many government agency boards.
So far, there has been speculation only in regard to including the stand-alone National Library and Archives New Zealand within the Internal Affairs Department, merging the Food Safety Authority with Ministry of Agriculture and Fisheries, and amalgamating the Foundation for Science, Research and Technology with the ministry of the same name.
Suggestions of disbanding the Ministry of Women's Affairs - a popular National Party target - appear not to be favoured by Mr Key as being hardly worth the trouble: he is looking at bigger targets for greater savings.
It makes sense for governments to regularly review the costs of administration and services and, especially, to look for efficiencies in operating and technology costs.
Some $2 billion is required to be found in the next two years for the latter, which in turn it is hoped should lead to less duplication of office support functions and services.
It is telling that Mr Key has cited last year's health sector reforms, which pooled district health board payroll and procurement, with estimated savings over five years of $700 million - and the loss of 500 jobs.
The Government does not consider what is planned to be on the scale of the radical reforms of the Rogernomics era, yet it has declined to make public estimates of potential job losses, which rather implies that the reforms will be sufficiently substantial to be job-costly, and the public service unions have not been slow to express their anguish.
The Government's objective has been clear for at least a year, when Crown entities were told to produce higher performances with fewer resources.
State-owned enterprises were also told to focus on better commercial objectives and to maximise productivity.
There can be no surprise that departments are being required to meet similar objectives after the Clark government bloated the public service to the extent National used that fact in its successful election campaign against "wasteful" spending.
Having long given public servants the autonomy to spend money and to manage it, and to do so independently of ministers, it behoves an even greater responsibility on Parliament to ensure such people are accountable.
However, the risk to National is that unless it can demonstrate to voters that its reforms have or soon will yield greater national benefit, will reduce bureaucracy and its costs, then its effort will have no more political success than the Muldoon government eventually discovered.
