We’re Spending Well, Not Spending Up - English

Hon Bill English

Minister of Finance

16 May 2013

Budget 2013 has freed up a further $1.5 billion by redirecting spending to where it delivers the best results, Finance Minister Bill English says.

This takes the total amount of reprioritised government spending since Budget 2009 to $14.9 billion.

“At a time when the Government’s finances are constrained, reprioritising spending allows significant additional funding for new or proven initiatives that get better results for New Zealanders,” Mr English says.

“It’s about spending well, not spending up.”

In total, Budget 2013 includes new spending initiatives worth $5.1 billion in the current year and over the next four years, paid for by a combination of new spending and $1.5 billion in reprioritisation and new revenue initiatives. Those savings and revenue initiatives include:

Tax and revenue changes that net an extra $313 million over four years.

Reprioritisation of $641 million to new spending initiatives within Budget votes.

Reprioritisation of $252 million of savings from across budget votes into significant new spending initiatives in areas like health, education, welfare reform, and science and innovation.

$303 million from existing contingencies.

“These savings are consistent with the Government’s approach across its five Budgets, which have together reprioritised almost $15 billion of spending,” Mr English says.

“New Zealanders were conditioned in the 2000s to believe that Budgets should be about the novelty of new, expensive spending programmes that held out promises of economic and social transformation. Those promises were illusory.

“There was no sustainable revenue stream to pay for the increased spending and there was nothing genuinely transformational to show for it.

“Governments should be judged on what they achieve rather than on what they spend. The value of our spending is a better measure than the amount of our spending. This Government is focused on results, and it’s paying off.  

“For example, recorded crime is at a 24-year low, and we’re rolling out new technology for frontline police officers, but the baseline funding for Police is not being increased.  Instead, Police are finding more efficient and effective ways of doing their job which is generating savings they can reinvest.

“At a time when many governments overseas are undertaking radical cuts to get their books in order, we are enhancing high-quality frontline public services while maintaining support for our most vulnerable citizens. That is a real achievement.

“The Government will ensure future Budgets continue to focus on improving frontline public services to deliver better results for New Zealanders, at the same time as improving value for money from more than $70 billion of public spending every year,” Mr English says.

Reprioritised spending – at a glance

Revenue

$20 million over three years from 2014/15 from extending and refining the scope of the thin capitalisation rules for foreign controlled (non-resident) investment in New Zealand.

$135 million over three years from 2014/15 from extending the Budget 2010 property compliance initiative. This focuses on improving the integrity of the tax system by ensuring the appropriate level of tax is assessed on speculative activity in the residential property market and, more generally, on property-related tax compliance.

Student Support

$18.7 million over four years from extending the stand-down period for permanent residents to three years.

$9.3 million over four years from restricting student allowance eligibility for over 40s to 120 weeks.

$7.9 million over four years from removing student allowance eligibility for over 65s.

Education

Using contingency funding from previous Budgets for the School Network Upgrade Project, National Education Network Trial, Network for Learning, and School Property Expansion ($196.4 million over four years).

A line-by-line review of Vote Education identified $228.5 million in the current year and over the next four years by refocusing existing spending on the Government's education targets and priority learners. The savings include:

A total of $29.9 million in savings over four years within Early Childhood Education, largely from grants and study awards discontinued because of declining demand. Funding has also been reprioritised to a stronger and more effective initiative that can be targeted to poorly-performing ECE services working with priority communities.

$70.5 million in savings over four years from both within Vote Education and Vote Social Development as a result of revisions to the Teach NZ scholarship scheme due to changes in the teacher supply environment. New teachers have been struggling to find jobs as vacancies fell to a ten-year low and remain flat. However, scholarships will remain in place where there are pockets within the system where schools and kura find it difficult to recruit teachers.

Health

·         $88 million in the current year and over the next five years consisting of $54 million underspends and reprioritisation from the Risk Pool, $20 million from less DHB deficit provisioning due to reduced deficits, and $14 million from further 2012/13 underspends in areas such as public health service contracts.

·         $48 million over four years from more efficient disability support contracting.

·         $30 million over four years from rationalising, consolidating and integrating various public health service contracts.

·         $12 million over four years from lower-than-forecast costs of the Voluntary Bonding Scheme.

Housing

$28.7 million over four years, and $2.7 million in 2012/13 from underspends in Weathertight Services.

$11 million over the next three years from Canterbury Earthquakes: emergency and temporary accommodation for the Canterbury Earthquake Recovery Programme.

ENDS

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