Budget 2012: Core spending inches up but union fears for jobs

Core public sector spending inched higher in yesterday's Budget but the Public Service Association fears the figures mask effective cuts stemming from the Government's plan to cut almost $1 billion from departmental budgets over three years.

The Budget shows total departmental "output expenses" at $35.65 billion were up 1.7 per cent, or $608 million, on last year. Most of that increase went into core health spending, which rose $540 million to $13.81 billion.

Of the 56 departments, 27 had their budgets cut and 28 received increases.

The Department of Statistics got one of the biggest boosts, with its core expenses rising almost 50 per cent to $163 million. That rise was down to $53 million of funding for the 2013 Census.

Read all of nzherald.co.nz's Budget coverage here.

Justice had one of the bigger cuts, down $57 million to $281 million. Much of that was down to a $31 million fall in legal aid funding and a similar-sized cut in expenses for the Electoral Commission, which received $36 million last year to run the general election.

Ministry of Economic Development spending was down 8 per cent to $169 million after being boosted last year by costs associated with the Rugby World Cup and America's Cup.

The small increase in overall spending comes despite last year's Budget announcement that the Government planned to reduce the core public service budget by $980 million over three years.

An important part of that plan was to make departments responsible for meeting employer contributions to KiwiSaver, the state sector retirement savings scheme and the teachers' retirement savings scheme out of their own budgets rather than from a central pool that has until now been provided for this purpose.

PSA national secretary Brenda Pilott said the resulting pressure on departmental budgets - which was difficult to quantify from Budget figures - would only add to the 2500 public sector jobs that had been lost in the past three years, resulting in reduced services to the public.

"We're already seeing the scaling down of our diplomatic presence overseas, border security compromised, prescription charges rising, police and defence personnel numbers cut, staffing slashed in a number of regional government offices such as IRD, ACC, Housing and DoC, cuts to community and health services, and vital frontline staff who offer personalised help being replaced by dysfunctional 0800 numbers."