The Government has found $4 billion of savings to top up its 2023 Budget, Finance Minister Grant Robertson has announced.
Faced with high inflation, Robertson warned at the end of 2022 that he would only set aside $4.5 billion of new day-to-day spending for this Budget, to be delivered on May 18.
If ministers wanted additional money to fund election year goodies, they would have to find it by cutting spending elsewhere.
In a pre-Budget speech to the Wellington Chamber of Commerce today, Robertson announced the size of those savings: $4 billion, although it is unclear whether all of that money will be funnelled into new spending, or whether some would be used to pay down debt. It is four times the amount of savings found in 2019, when Robertson directed ministers to do a similar exercise - just $1 billion was found then.
“Ministers were sent a clear message that if they wanted to progress particular priorities, they needed to be looking for savings opportunities within their own agencies’ existing budgets.
“The outcome of this exercise is that Budget 2023 will include $4 billion of savings and reprioritisations over the four year forecast period. For the most part, this funding has gone toward funding agencies’ existing cost pressures.
“We will detail in full what makes up this number when the Budget is released, but to be clear, these savings have been found across a wide range of areas, some of which have been well publicised already,” he said.
A large amount of this money has come from cancelling things like Covid-19 spending and axing the sweetener payments promised to councils for Three Waters reforms.
It would mean ministers have $8.5 billion worth of new day-to-day spending to allocate in the Budget, making this Budget fairly large in historic terms.
Robertson also warned that the slowing economy was having an effect on the Government’s economic forecasts, which will be published with the Budget next week.
“It is inevitable that this will have an impact on our key fiscal indicators. We can also expect to see tax revenue lower than previously expected as we saw in the Crown accounts released this week.
“Our position remains strong and we are resilient, but there is no avoiding global and climatic forces."
Robertson took a crack at the opposition for suggesting tax cuts should be on the table, saying they were probably unaffordable whilst funding public services adequately.
“Others may suggest to you that inflation means that the Government can afford to do any number of things, including tax cuts.
“This might be a convenient political line to run, but it is not an economic policy appropriate to this time in New Zealand.
“Adequately funding the services that New Zealanders rely on every day is a serious challenge and one which has occupied much of our time and resources in the Budget I will deliver next week.
“Making sure we meet the needs of our people in health, education and housing is core, and it simply has to come first.
"I don’t go around telling people that spending on public services will go up, public debt will go down and taxes will be cut, all at the same time,” he said.
