The government spent $12 million on redundancies as it merged departments with the new Ministry of Business, Innovation and Employment, Labour says.

State services spokesman Chris Hipkins says it's an "enormous bill" for taxpayers and the government has no coherent plan to improve public services.

He says that on top of the redundancy payments, the Ministry of Economic Development spent $19m on consultants and contractors as it prepared for its merger.

"This process is as inefficient as they come. National's public sector restructuring has been ad-hoc and motivated by empire building," he said on Monday.

Fourth-ranked cabinet minister Steven Joyce is in charge of the new ministry and Mr Hipkins says he hasn't finished shuffling people around.

"The creation of the new ministry will mean a second or even third round of restructuring for some of the employees involved."