The New Zealand embassy in Japan has reportedly set aside almost $1 million to upgrade a swimming pool in its complex, despite the Ministry of Foreign Affairs and Trade (MFAT) cutting more than 300 jobs to save money.

TVNZ tonight reported the money was set aside to upgrade the pool and recreation complex at the embassy as part of an eight-year project.

The project would have seen $550,000 spent this financial year on a filtration system and other upgrades and $93,000 next year.

Last week MFAT chief executive John Allen confirmed 305 jobs would be cut and 600 staff would have to reapply for their jobs in new specialist roles as part of a proposed restructure.

Allen confirmed the ministry was also considering outsourcing some functions. That included a 24/7 call centre based in Wellington.

The restructuring was expected to save $20-25 million annually.

Foreign Affairs Minister Murray McCully told TVNZ that he had asked the Japan embassy to put a halt to non-essential capital expenditure.

He said 16 apartments are part of the Tokyo compound upgrade as well as a new badminton court area and gym.

Labour foreign affairs spokesperson Phil Goff heavily criticised the spending.

"When core rolls are being lost in the ministry, where people are promoting New Zealand's interests overseas, that's a totally perverted sense of priority,'' he told TVNZ.

Last week NZ First leader Winston Peters told Fairfax Media the cuts were "insane" and jeopardised New Zealand's future.

New Zealand was desperately trying to increase its overseas trade and needed diplomatic missions to break through an increasing number of trading blocs, he said.

"Countries like Singapore, Brazil and Norway, which are doing very well, are increasing their overseas posts. They understand the way the world works."