Prime Minister John Key says a drive for "better value for money" from New Zealand's state sector including health, welfare, and social services - particularly for children - will be a key focus for his Government this election year.

In notes from Mr Key's statement to the House this afternoon, he outlined his Government's intentions for the 12 months ahead while taking a number of shots at the Labour Opposition.

Click here for John Key's statement in full.

Just a week after the Savings Working Group identified increased efficiency in the state sector as quick fix for New Zealand's primarily private sector debt problem, Mr Key said New Zealanders' aspirations rested on two platforms.

Mr Key said New Zealanders had high expectations of state health, education, justice, and social services.

"A lot of money was thrown at these areas by the Labour Government but they achieved few, if any, resulting gains. We have have made significant progress, for example in health, but some services are failing those who need them most," Mr Key said.

"I am determined to turn this around. The National-led Government will be clear about our priorities - we will scale up what works, and get rid of what doesn't."

National campaigned on "capping" the public service during the 2008 election campaign but this afternoon, Mr Key said his Government had reduced the number of state sector jobs by five per cent. Labour and state sector unions say those job cuts are now affecting the quality of services.

Mr Key said there was more to be done to make "government bureaucracy smaller and better" and he had asked for advice on "further reforms to streamline and improve" its performance.

His speech also took a number of swipes at Labour in areas where it has sought to win over voters.

Against the backdrop of Labour's recent attacks on what it says are cuts to early childhood education, Mr Key said the existing model of funding, a legacy of the last Labour Government, would see a record $1.4 billion spent in the area this year. In spite of this, large numbers of children were missing out on such care altogether.

"This is a clear case where, despite increased spending, Labour failed those who most need the Government's help."

Improving the result of public services directed at children would be a "special focus" for the Government. Initiatives would include stronger support for children in state care and changes to welfare, health and benefit systems.

Mr Key said his Government would also look to make broader changes to the benefit system in response to the advice of the Welfare Working Group which has yet to produce its final report.

Mr Key also took a swipe at Labour's proposal to review the means by which the Reserve Bank manages the economy.

His Government would continue to support "stable and predictable monetary policy" in which controlling inflation remained the primary focus.

Key Pledges
The Public Service:
* More back office savings initiatives
* Further restraint in "core government administration positions"
* More consolidation of agencies and function

* Stronger support for children in state care
* Changes to improve early intervention programmes for vulnerable children
* New laws to toughen the penalty for neglecting or ill treating a child
* Creating a new offence of failing to protect a child from the risk of death injury or sexual assault

* Changes to better support beneficiaries with children back into work
* Better support to return sickness and invalid beneficiaries to work
* Ensuring young people have skills and support to escape the benefit system and to prevent them entering it

* Increasing the volume of elective surgery by 4000 patients a year
* Ensuring 95 per cent of emergency department patients wait no longer than six hours
* Ensuring cancer patients receive necessary radiation treatment within four weeks
* Achieving 95 per cent immunisation coverage for two-year-olds

The Economy:
* Sticking with the Reserve Bank's existing montary policy framework
* Progress work on NZ Inc India and NZ Inc China strategies.
* Work towards free trade agreements with South American countries

* Reviewable tenancies for all new state houses begin in July allowing Housing NZ to move on tenants who no longer require a state house.