Government sends out razor gang to tidy up spending

The Government has set up a razor-gang to review spending. Core departments and agencies will be scrutinised with a Cabinet committee as overseer.

Associate Finance Minister Trevor Mallard said yesterday: "The reviews are not aimed at cost-cutting, they are intended to assist Government to get more nimble at moving resources to where they have the greatest impact."

The review will spark nervousness in some agencies. Specific issues to do with the effectiveness of a number of them are raised in the Cabinet paper on the review released yesterday.

Capital asset management costs are also blowing out and will be reviewed across the board, but with a focus on defence agencies and the departments of Corrections, Justice and Police.

The value of the Crown's physical assets increased two-thirds between 2000 and 2005. In the last financial year, spending on them was $1.6 billion, but despite the increase, the paper said "gains from this spending are unclear".

Labour has a policy of not selling state assets and Mr Mallard said the review would not involve "hocking" them off. But the Government wants better value-for-money regimes for management.

Some Ministry of Economic Development business assistance programmes, on which spending has significantly increased in recent years, appear set to be axed. The paper calls for the reprioritisation of spending on the programmes "including possibly phasing out some components".

Child, Youth and Family appears likely to come under particular scrutiny, with the Government concerned that while it has had a 50 per cent budget increase since 2003, "it remains unclear to what extent this has led to improved outcomes".

The Government also appears likely to offer greater incentives for people to become permanent guardians of foster children, noting that the department has 5000 in its care.

As already signalled, it wants greater productivity and improved performance from the health sector.

Immigration spending, significantly up, will be reviewed and immigrants may face fee increases.

The Ministries of Social Development and Transport will also be reviewed.

National finance spokesman John Key criticised the decision to allow agencies to review themselves, saying it proved there was no real intention of overhauling spending. The review was "more akin to a toothpick gang than a razor gang".


The targets

* $10 billion health budget
* $1.6 billion capital spending
* $457 million Child, Youth and Family funding