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HYFU And Budget Policy Statement On December 15

Contributor:
Fuseworks Media
Fuseworks Media
Bill English
Bill English

Wellington, Nov 26 NZPA - Many government departments are being warned that they will have to cover all cost increases from within existing budgets, Finance Minister Bill English said.

Mr English announced today that Treasury would update its books and forecasts with the Half Year Economic and Fiscal Update on December 15.

The Government will also release its 2010 Budget Policy Statement, which outlines Mr English's broad strategy.

He used the announcement to attack Labour's budget for an increased baseline expenditure of 45 percent between 2005 and 2010 at a time when the economy and inflation only grew by 15 percent.

More than a third of all spending areas had increased by 50 percent in the past five years and two thirds received increases of more than 30 percent.

"This kind of rampant spending growth is unsustainable and cannot continue," Mr English said.

He also repeated a message to his ministers that new spending would be capped at $1.1 billion across all government spending.

Mr English was confident it could be done.

"We need to. We have set out to contain the rise in public debt even with $1.1 billion cap public debt will virtually double in the next four or five years."

This cap would have to include all cost increases in health, education and all other spending areas.

Mr English said his predecessor Michael Cullen had managed to work within a $1 billion cap in 2001 and it was only since 2005 that public spending "really took off".

Government departments were working through their spending to see what money could be better spent elsewhere.

In many cases this would be the only option departments had for any new projects or cost increases.

"A lot of them won't get any money and they will need to cover their own cost drifts," Mr English said.

Finance ministers in the past have used a number of tactics to get savings from departments, letting them keep them all for new initiatives or a proportion of those savings.

Mr English is in early budget talks with ministers and would not say whether he would be using such budget tactics, though he has repeatedly said there is no single savings target for ministers.

Labour's finance spokesman David Cunliffe said the public should be very afraid of what the 2010 budget would have in store for them and predicted "the father of all budgets" with savage cuts to ACC, education and health.

Mr English released a table listing increases by portfolio which stripped out some increases in benefits and Working for Families payments.

The table shows baseline expenditure growing from $28.2 billion in 2004/2005 to $41 billion in 2009/2010.

The big ticket increases were in education from $7.7 billion to $10.7 billion -- an increase of 39 percent, and health from $9.3 billion to $12.6 billion -- an increase of 35 percent.

Some of the smaller portfolios racked up large increases with racing spending going up from $0.2 million to $4.4 million an increase of 2220 percent.

The biggest drop was in veterans' affairs social development spending which went from $3.8 million to $0.5 million.

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