Pet projects face cuts, Key warns

Prime Minister John Key. Photo / Mark Mitchell

The Government's coalition partners have been warned their pet projects will not be exempt from the drive for savings in this year's Budget, with funding for the Act Party's taskforce and Maori Party's Whanau Ora scheme under review.

Prime Minister John Key said yesterday his coalition partners may have to sacrifice some of their causes as the Government prepared an austere Budget to respond to the struggling economy and the cost of the Christchurch earthquake.

"They're not immune to that so of course we'll have a look."

While significant increases had been expected over time for Whanau Ora - the Maori Party's flagship social policy programme - those increases might now be delayed.

He would also review the need for Act's 2025 Taskforce - set up to suggest ways to close the income gap with Australia and provide annual reports on progress. Asked if it was still worth funding, Mr Key muttered it was "probably not".

Taskforce chairman Don Brash said he applauded any moves to cut government spending but the Taskforce annual budget of $160,000 added up to just .00001 per cent of the Budget deficit before the earthquake. The Taskforce had already presented its two major reports and the remaining job was an annual report on progress made in closing the income gap.

"A cynic might say they are more than happy not to have a report on progress this year, but that would be all too cynical."

Yesterday Act leader Rodney Hide said he would offer up the Taskforce if needed but expected other support parties to make similar sacrifices.

"Certainly I would be saying to Peter Dunne 'do we really need a Families Commission?', given it hasn't done much and given the circumstances."

Maori Party co-leader Tariana Turia said she was still negotiating funding for Whanau Ora and had not seen any evidence the Government was not committed to it.

Neither Mr Key nor Mr English had told her funding might be delayed.

"That's something I will talk to him about," she said.

Mr Key said many savings would be made from chipping away at major schemes such as Working for Families, where the Government has indicated it will cut credits for higher income families. Other possibilities included further tightening of eligibility for student loans and changes "at the margins" for KiwiSaver, which costs the Government $1.1 billion a year.

Mr Key said none of the proposals he had seen from ministers so far were "in the camp of radical". "You're talking about very big schemes where we might be able to find $20 million or $30 million - they all add up".

Labour leader Phil Goff said National was now effectively using the earthquake as an alibi to push through its own wishlist of cuts. As the Opposition, National described Working for Families as "middle class welfare" and Mr Goff said it was now using the earthquake to justify cutting it.

"This is their agenda and they are not wasting a good crisis to justify it."

Mr Key rejected Labour's contention that huge cuts would have to be made to hold the Government's overall spending level. He said the Government needed to show it did not have its head in the sand if it was to avoid a rating downgrade.

HUNT FOR SAVINGS

ENDANGERED
* KiwiSaver: Minor changes.
* Student loans: Eligibility criteria further tightened.
* Working for Families: Higher income families might miss out.
* 2025 Taskforce to close the income gap with Australia: Could be scrapped.
* Whanau Ora: Gets less funding than expected in the short term.
* Ministry of Women's Affairs: Could be ditched.
* Families Commission: Could be ditched.

SAFE
* Most major infrastructure projects in other main cities.
* Tax cuts.
* Benefit levels.
* levels and eligibility.
* Interest-free student loans.

RULED OUT
* Land tax.
* Capital gains tax.
* Earthquake levy.