Key Points:

National would ask state sector bosses to find savings in their departments if it wins the election, in a move which intensifies focus on the spending and saving intentions of the two major political parties.

On a day when Labour committed itself to keeping New Zealand Superannuation at a minimum of 66 per cent of average weekly earnings and allowing beneficiaries to earn more through work, National accused its opponent of making promises that would send the country further into the red.

The opening of the Government's books this month revealed a sharply deteriorating financial picture with big deficits forecast even before the global financial crisis worsened.

National leader John Key yesterday said the next two years would be tough and the Government needed to ensure it was getting value for money from its own departments.

"Things are going to be tight over the next couple of years," he said.

"We just need to make sure that the waste is removed from the system."

National has questioned the growing number of people employed by the Government for some time.

It has pledged to cap the bureaucracy at 36,000 and has been talking of redirecting resources towards "frontline" services.

Yesterday it became clear Mr Key was going to look hard for savings if he became Prime Minister.

He would call state sector chief executives in to talk with him after the election and ask them for a "line by line" of their expenditure with an aim to make savings.

"It's very important that we get value for money because that's what New Zealanders are being forced to do around their kitchen tables every day," Mr Key said.


Asked what he would do if a chief executive said there was no room for savings, Mr Key said that boss would then have to be prepared to make no changes to the department.

A special committee within the Cabinet would be set up to oversee the review process.

National's plans immediately raised the spectre of so-called "razor gangs" which have been used by previous politicians to trim government departments.

Public Service Association national secretary Brenda Pilott criticised National's plan.

"If people lose their jobs because of the crisis, they will need support from public services to ensure they can feed their families and to try and get them back into the workforce," she said.

National's renewed saving push contrasts with Labour's approach during the past week of the election campaign, in which it has pledged a phased-in boost to student allowances, changes which will allow beneficiaries to earn more before their payments are reduced, and the bringing forward of an unknown amount of infrastructure spending.

None of these three moves were included in the Government books that were opened this month, but Labour argues it will pay for the first two out of the $1.75 billion allocation of new spending in the books.

The infrastructure push would be paid for by taking on more debt earlier.

Yesterday Labour committed itself to keeping the floor of superannuation at 66 per cent of average earnings. The New Zealand Institute of Economic Research this week estimated for the Herald that such a move would add $54 million to spending in 2010/11, $117 million in 2011/12, and $126 million in 2012/13 when compared with the Pre-election Economic and Fiscal Update.

National factored a 66 per cent level into the fiscal forecasts it released with its tax-cut policy.