No treats as Budget must fill the gaps
WELLINGTON: The Labourled Government is warning its first Budget will not contain many treats because most of the money will have to fill largerthan expected funding gaps in health and education.
It plans to dripfeed details about the state of the nation’s public services in the leadup to next month’s Budget.
Labour would not be abandoning its election promises, Prime Minister Jacinda Ardern said yesterday, but could take longer to deliver on them.
‘‘We won’t be able to rebuild or deliver everything,’’ she said.
‘‘What we are articulating here is this Budget is a rebuilding Budget.
‘‘This is a reinvesting in core services. That’s what New Zealanders expect. That’s what we need to do.’’
That could take some time, Ms Ardern said, because her Government was discovering underinvestment in a broad range of core services.
‘‘I’ve always said from the beginning that it would be bad,’’ Ms Ardern said of the underinvestment in schools and hospitals.
‘‘We didn’t know it would be this bad.’’
The dire state of South Auckland’s Middlemore Hospital, which has been found to have mouldy walls, leaking sewer pipes and insecure power supply, was one of the most vivid examples of what Labour was facing, its minister said.
However underinvestment was not limited to infrastructure, but also basic public services and departments’ ability to pay their staff.
‘‘We have a health service under significant strain. Would I call it a crisis? When people hear stories like Middlemore, that’s certainly the impression you’re left with.’’
The blame for the deficits was placed squarely on the previous National government, who Ms Ardern said had focused on ‘‘the books looking good’’ at the expense of public services.
National finance spokeswoman Amy Adams said Labour simply failed to grasp the constant and often unexpected demands on the public purse and as a result had overpromised.
‘‘The reality is sinking in. And they’re looking to blame everyone except themselves. The economy they inherited is half a billion dollars stronger than expected. Instead they’re simply finding they can’t spend on everything they wanted to because they hadn’t allowed for the normal cost pressures and unexpected calls that come up in Government.’’
More funding gaps will be revealed before the May 17 Budget, as Labour softens expectations further.
Despite the funding deficits, Labour said it would not reconsider the strict fiscal rules it agreed to during the election campaign, which bound the Government to spending limits and debt reduction targets.
Labour agreed to the rules alongside the Greens to calm fears about their economic management, but unions and others have questioned the restrictions given the pressures on the public service and low lending rates.
Finance Minister Grant Robertson said the Government got itself headroom by committing to paying down debt two years later than National, and could make the investments it wanted to without scrapping these rules.
On top of rebuilding public services, he said the Budget would focus on child poverty, homelessness and supporting lowincome families. There would also be climate change initiatives and support for heavily fossil fueldependent regions. — NZME