More Govt red ink ahead, English warns

Finance Minister Bill English is warning more red ink will flow from next month's opening of the Government's books and many government departments are being warned that they will have to cover all cost increases from within existing budgets.

English has confirmed Treasury's half-year fiscal update and the 2010 Budget Policy Statement will be released on December 15.

English said the books would highlight "the legacy of Labour's relentless spending increases over recent years''.

He signaled the Government is preparing further cuts in current spending, saying if National could not fund new priorities without pushing debt to unsustainable levels "then finding savings in existing spending will be critical''.

English said recent large spending increases provided ample room for reprioritisation. "This will be a feature of Budget 2010 as the Government delivers its priorities within the $1.1 billion cap it has set out for new operating spending.''

English said baseline budget spending had increased by 45 percent since 2005 while the economy had grown by 15 percent. "This kind of rampant spending growth is unsustainable and cannot continue.''

"No business or household can continue operating this way - and nor can the Government. That's why this Government is taking steps to slow future spending increases and get debt under control.''

English has also dropped hints about where the cuts may come, listing education, health, corrections, police, and housing as areas where baseline spending had blown out.

Education spending was up 39 percent in five years, while health spending had increased by 35 percent. Corrections spending had almost doubled, while police was up 48 percent and housing 234 percent, although from a much lower base.