MPs cut everything in public service except own spending

Prime Minister John Key's department offered only $300,000 in savings from a 'salary freeze' for one year, saying any further cuts would impact on the quality of the service it provided. Photo / Dean Purcell

Politicians have escaped the "razor gang" that is cutting Government spending.

Now the Treasury has suggested freezing the amount of money available to ministers in order to force them to lead by example.

The results of "line-by-line" reviews of departmental expenditure were released among Budget documents yesterday.

They reveal that the departments that look after the politicians - Ministerial Services, the Parliamentary Service and the Department of the Prime Minister and Cabinet - emerged largely unscathed from the Government's cost-cutting demands.

However, the Treasury had a pointed message for the new National Party ministers. It said they were "accentuating" the problem with a travel bill of $739,000 in their first three months - more than double the $336,000 Labour ministers spent on travel in the same period the year before.

The Treasury was disappointed at savings of just $136,000 in Ministerial Services - just 0.02 per cent of the agency's total spending.

However, any significant savings within Ministerial Services would come only if ministers reduced their own costs - and so far the new Government had "only accentuated the cost pressures."

The Treasury said there should be no further increases. "This would require ministers to manage budgets more effectively and employ cost-cutting measures, which would not only reduce unnecessary spending in this area but also send a strong signal to the entire public sector that ministers are fully committed to fiscal responsibility."

The Treasury demanded some departments do a second round of savings - including Corrections and Police, which were told to aim for at least $20 million to $30 million.

The Department of the Prime Minister and Cabinet, Ministerial Services and the Parliamentary Service proved better at coming up with excuses than savings.

Prime Minister John Key's department offered only $300,000 in savings from a "salary freeze" for one year, saying any further cuts would impact on the quality of the service it provided. Instead, it suggested Mr Key scale back the renovation of Government House - an option he later took to save $4.7 million.

A report from chief executive Maarten Wevers said the department already used its $15.5 million budget tightly, and keeping its current staff levels was "an important part of allowing the Government to carry forward its agenda".

Senior management had agreed to a pay freeze for this year and planned to keep total salary costs level - which would achieve up to $300,000 in savings in 2009-10. One option was to cut staff, but this would impact on service.

The Parliamentary Service - which pays for MPs and the Speaker - said that while it had a budget of $124.8 million, $76.8 million of this was in fixed spending which it could not alter.

While "in theory" it should be possible to reduce costs, it said, that would result in a reduction in the quality or the extent of services - requiring "careful management" of the MPs' expectations.

It could not cut entitlements to MPs - but it proposed general measures, such as monitoring its spending tightly, reviewing capital spending and the granting of contracts and using technology to reduce the need for staff.