English sets out rules for Budget

Government departments have had to identify up to 10 per cent of their lowest value spending ahead of the Budget on May 28.

A letter from Finance Minister Bill English was sent to all ministers in December. It, with Treasury briefings to departmental heads, laid down the rules for the Budget round.

In the letter, released this week under the Official Information Act, Mr English outlined a long-term and ongoing review of spending as well as the short-term process to identify savings for the Budget.

Treasury said departments should identify programmes that were inconsistent with the new Government's priorities or of "limited, unknown or uncertain" cost effectiveness.

"Using your detailed knowledge of both the department and sector ... can you identify the spending that delivers the lowest value for money, say the bottom 5 per cent and 10 per cent?" Treasury said.

Mr English had told his ministerial colleagues that by February 5 reports on savings should be completed.

Mr English warned repeatedly about the pressure on the Budget and said the previous Government's tagged contingency spending and specific fiscal risks were to be removed and if necessary resubmitted as part of the Budget process.

Departments would not be allowed to make emergency bids for new money unless there were no other funding options and "where the decision to cease delivery would directly result in an unacceptable service failure to the public".

Labour's state services spokesman Grant Robertson said the Government's short- and long-term plan was to cut into public services and it should be explicit about what would go.

- NZPA