Reduction in the size of the public sector has been a recurring theme in reviews of the public sector, particularly reviews by the World Bank, in Papua New Guinea and elsewhere. In 1990 (coinciding with Papua New Guinea’s first application for a structural adjustment loan) the World Bank called for a downsizing of the public sector, while at the same time noting the need for improved health and education services (World Bank 2000; also see Curtin 2000). Retrenchment exercises were carried out in 1990, 1994 and 1996, but were generally judged to have had little effect, with retrenched public servants either remaining on unattached lists, being reemployed, and/or being replaced by new recruits. In 1999 the Skate government announced plans to reduce the public service from 60,000 to 52,500, with costs to be met from privatization of public enterprises. But the proposal was not based on any review of functional requirements and substantially underestimated the costs of the retrenchment, with the result that many ‘retrenched’ personnel remained on the payroll. When the Morauta government came to office, the retrenchment program was suspended, pending further study. As noted, the issue was raised again in the PERR, and is referred to in the MTDS 2005–2010 (54) as a core objective of public sector reform.
In 2005, an independent committee, headed by the late Mike Manning, then director of the Institute of National Affairs, was asked to undertake a study and make recommendations on public sector rightsizing, in the context of a government policy of reducing the public sector by 10 per cent, primarily in ‘non-key service areas’ (though it does not seem to be clear whether the 10 per cent referred to wage and salary costs or workforce numbers). The committee reported in September 2005. It recommended the abolition or merger of several government departments and agencies (including DPM, DNPRD, DPLGA and the National Research Institute), reduction in the number of ministries and ministerial advisers, closure of several overseas missions, and the outsourcing of some services to public providers (Public Sector Rightsizing Working Group 2005. Also see Papua New Guinea Post-Courier, 23, 24, 28 February 2006), but Manning was reported as saying that the committee was unable to achieve the desired reduction of 10 per cent and maintain the essential services of government (Papua New Guinea Post-Courier, 24 February 2006). By the end of 2006 few of the committee’s recommendations had been implemented.
Separately, retrenchment within the Papua New Guinea Defence Force (PNGDF), as part of a recommended Force restructuring, seeks to reduce troop numbers from around 4200 to less than 2000. But despite external funding for the retrenchment, poor handling of the exercise resulted in early 2001 in a near mutiny, during which soldiers broke into the PNGDF armory. The Morauta government agreed to rescind a cabinet decision on Force size reduction, though in fact numbers continue to decline, primarily through a Voluntary Release Scheme.
 Notwithstanding this, in an article in Papua New Guinea Yearbook 2002, Morauta stated that retrenchment had cut K27.6 million from the public service wage bill and that in the National Fisheries Agency and the Government Printer alone staff had been reduced by 235 (Morauta 2002, 8-9).
 Numbers vary: at the end of 1998 Force size was 4600; in 2000 there was talk of reducing numbers from 4200 to around 3000 at the end of 2000 and 1500 by mid 2001; in January 2001 a Commonwealth Eminent Persons Group recommended a cut from what was then 4150 to 1900 within six months; in June 2001 Force size was quoted as 3340 and the aim was to reduce this to 2000 over three years. At the end of 2006 Force size was around 2300.