“What I think is less understood by commentators is that our savings go well beyond tax relief. The Government is making active choices to stop some areas of spending so that we can redeploy those funds to better uses in front line public services and other Government priorities,” Willis said.
“Reining back spending over time does mean that savings and reprioritisation will be business-as-usual activities for our Government. They will be a feature of future Budgets, just as they are of Budget 2024.
“The Government will continue to seek out areas of less effective government spending and redeploy resources to front line services to get better results from schools, hospitals and other essential services,” she said.
Willis said these savings would help create headroom to “fund future priorities without adding to debt”.
The speech revealed the Government was running a structural deficit of 1.5 per cent of GDP, or about $6b.
A structural deficit is different to the books suffering under the weight of a one-off shock and suggest the Government’s spending is unsustainable over the long term without additional revenue or spending cuts or both.
“We’re borrowing to pay for the groceries. That is not sustainable in the long term as it requires continual borrowing to cover expenses, leading to a never-ending debt spiral,” Willis said.
One of the Government’s spending cuts landed it in hot water on Thursday as Housing Minister Chris Bishop revealed the Government had given Kāinga Ora 24 hours or less to prepare for axing the first home grant scheme it administers.
The timeline suggested the announcement had been brought forward by ministers after news the scheme was being axed appeared in the media in order to stop people from getting their foot in the door of the scheme ahead of a formal announcement of its demise on Budget Day next week.
Hints of the grant’s demise dropped on Tuesday morning ahead of National’s weekly caucus meeting. Later that day NZ First minister Shane Jones appeared to confirm that a change was coming in the Budget. When asked about the grant, he said that reporters would need to wait until Budget day. On Tuesday night, Newshub reported the grant was gone. Other media soon followed.
At 1.30pm the next day, Bishop formally announced he had scrapped the scheme.
Bishop said the decision to scrap the grants was made as part of the Budget, but confirmed Kāinga Ora had only been told about it after media began asking questions about the end of the scheme - and possibly after the first story aired confirming that it was gone.
“We signed-off on the decision some time ago, but Kāinga Ora was not told either until yesterday morning or the afternoon before,” Bishop said.
“Up until the point at which we told them it was a Budget secret… we had to tell them obviously because we wanted to take the website so people couldn’t apply,” he said.
Labour’s Housing Spokesman Kieran McAnulty said the “only reason this was announced on Wednesday was because it was leaked the night before”.
“The Government tried to keep this quiet until the Budget in the hope it would be overshadowed by the other announcements”.
McAnulty said there “will be people who were about to apply for the grant but have missed out because of the Government’s mismanagement and disorganisation”.
Thomas Coughlan is deputy political editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the Press Gallery since 2018.
