On Govt savings, reprioritisations

A109 Light Utility Helicopter flight with mayor Gisborne City from the air in November 2023.

Opinion

The Government kicked off the final sitting week of Parliament on Monday by setting out a plan to save $4 billion over the next four years, with some departments told to reduce spending by 1-2 percent and further savings to come from reducing consultant and contractor use to pre-Covid levels.

It’s a response to that fiscal hole we heard a lot about earlier this month, which showed up in the Crown accounts for the 11 months to the end of May (published in July) as a $6.5bn deficit, $2.2bn worse than was projected in May’s Budget — caused by the corporate tax take falling sharply, from businesses that are less profitable due to cost pressures.

National’s finance spokeswoman Nicola Willis described the plan as “far too little, far too late”, “after six years of spending New Zealanders’ money with reckless abandon”.

If elected she said National would both rein spending in and deliver tax cuts for struggling middle-income New Zealanders. National was to announce its tax policy today and would wait for the pre-election fiscal update on September 12 before releasing its own financial plan, because Labour “leave things in a mess”.

Act leader David Seymour said the cuts did not go far enough; his party would cut $35 billion of “wasteful spending” over the next four years.

Conversely, the Green Party said the announced cuts would constrain future governments and showed the need to raise revenue through higher taxes on wealthy New Zealanders and big corporations.

The Government  had also included $4bn of savings and reprioritisations in the 2023 Budget delivered in May — much of it related to the policy bonfire under new leader Chris Hipkins.

It  topped up the Climate Emergency Response Fund then by $1.9bn, but returned $236m of that to general coffers as part of this new savings plan.

There was also $101m in savings from pulling support for two projects set for funding from the Infrastructure Reference Group (set up to replace the Provincial Growth Fund and stimulate growth during the Covid-19 response), one with high interest in this region — $45m for a proposed barging facility at Wharekahika/Hicks Bay, announced by then Infrastructure Minister Shane Jones in the lead-up to the 2020 election. The other was a $60m pledge for a waterfront conference and multi-events facility in Whangārei.

Robertson defended this, saying: “The vast bulk of the 230-odd projects that were funded through the Infrastructure Reference Group are fine, they’ve been developed, they’ve been delivered. There were one or two where some of the commitments from other partners didn’t materialise, or where when further work was done it was realised that they weren’t able to be delivered,” he said.