Frontline public sector cuts to come
The Government is turning its savings drive on to front line public services, with Finance Minister Bill English promising inefficiencies "will have to be sorted out" in his next Budget.
English today confirmed comments by Prime Minister John Key that new spending in this year's Budget, set to be delivered on May 24, would be cut very close to zero, after it was only weeks earlier set at $800m.
"It's become clear that we can do better than that [$800m] so we're going to do better than that," English said.
"We have the choice of actually committing less than the $800m and then offsetting that with other savings."
Even after Treasury forecasts in February slashed the projected surplus in 2014/15 to about $300m, Key said the Government still intended to add $800m of new spending in this year's Budget. But he hauled that all the way in to "another zero budget this year or very close to it," in comments at the weekend.
English today said the lower spending allowance had arisen from the need to deal with a softer than expected tax take and the emergence of new opportunities for savings that had cropped up.
"I think everyone is aware the tax take has been a bit softer and that makes the [surplus] target harder to achieve. There are also other opportunities around saving that have become apparent and we'll take those," English said.
The Government's "general strategy" remained trying to move money on to front line services, but English signalled pressure would go on for savings there too.
"Where the front line is inefficient, of course, it will have to be sorted out," he said.
"We're not offering any guarantees … Just by way of example, if you can give the police mobile technology, then you could get more frontline hours with the same number of police - so it's more policing, safer public and we cut costs."
Last year's "Zero Budget" included cuts to the popular KiwiSaver and Working For Families schemes. Some of those changes kicked in on April 1 this year, with more still to take effect.
Asked if similar cuts were possible in this year's Budget, English today said: "You wouldn't be looking at big steps like that. We've got the system pretty focused on being more efficient and effective and that's starting to yield some benefits."
He would not rule anything in or out but added: "You wouldn't expect some major surprises."
"The Prime Minister has signalled that it's going to be a tight Budget. It'll be a tight Budget but a manageable one."
Labour leader David Shearer said another "zero budget" was "probably inevitable" because of sluggish economic growth, but it would not be good for the country.
"We've got lots of issues that we need to follow up on but at the moment we don't have any money because we don't have an economic plan that would take us forward," Shearer said.
"At the moment, the Government's lack of a plan to grow the economy has meant that we're going to have another zero budget, that services are going to suffer as a result and New Zealand will go backwards in the OECD."
It was "a bit unrealistic" for Labour to have its own alternative economic plan only three months after the election, he said.
The Dominion Post