A NZ Treasury report suggests the Government should be exhausting means to yield public sector savings of $250 million a year.

The Treasury's suggestion could mean a further slashing of 2,400 public service jobs, Dominion Post reports.

Over 2,500 public sector jobs have gone since National took office in 2008, but the Treasury report indicates spending in the past two years has been cut by only $20 million. For its part, the Treasury itself saved only $338,000.

"Backroom" jobs, according to the Treasury, should be slashed by 20 per cent, even as the backroom jobs were not defined.

Dominion Post says backroom jobs could mean jobs in human resources, IT and finance services.

Deputy Chief Executive Andrew Kibblewhite said Treasury saved only $338,000 between 2009 and 2011. The agency now hopes to reduce their total "headcount" by 20 per cent, which means a cut of 17 fulltime jobs.

"I would expect if shared service type functions are happening in other agencies then you would get something of a comparable magnitude. But (the cuts) would depend on the specifics that each agency is dealing with," says Mr. Kibblewhite.

In reaction, Public Service Association National Secretary Richard Wagstaff said a further employment cut was "overly ambitious" and could result in poor performance in government departments.

Mr. Kibblewhite maintains the Treasury's recommendations were "not unrealistic."

In an opposing view, Labour's State Services spokesman, Chris Hipkins, pointed out Treasury staff numbers had increased by 13 per cent in the last three years.

"There's a bit of a double standard applying," said Mr. Hipkins.