How will the Govt cut $800m of spending?

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Tue, 22 Mar 2011 6:16p.m.

Finance Minister Bill English (NZPA file)

Finance Minister Bill English (NZPA file)

By Duncan Garner

The Government is not ruling out cuts to KiwiSaver as it runs the knife over the 2011 budget.

It wants to cut $800 million of planned spending in the wake of the Christchurch earthquake.

And today Rodney Hide offered up half a million dollars of savings through one of his babies - the 2025 taskforce headed by Don Brash.

Mr Brash heads the 2025 taskforce, tasked with finding ways of catching Australia and its wages.

It is costing taxpayers half a million dollars.

But Mr Hide says even though it was his idea, he says dump it.

“I'm happy to put that on the table for discussion,” he says.

Another deal was Tariana Turia's Whanau Ora – which provided social services for Maori – and that might be trimmed now.

But these items will not save the Government target of $800 million.

So it is not ruling out changes to the popular KiwiSaver.

“There are some very big schemes out there and the Government may look at them, and at the margins some changes,” says Prime Minister John Key.

KiwiSaver is large and expensive. It costs $1.1 billion every year.

1.6 million Kiwis have now joined. The government gives everyone a $1000 kick start – and now that might go.

There is the $1000 and $24 tax credit every year, and the up to $10,000 first home subsidy for a couple.

“If some of those larger programmes can be trimmed we've done it in the past and we will do that again,” says Finance Minister Bill English.

Other areas the Government is also not ruling out trimming are:

- Interest free student loans that cost $1 billion a year.

- The interest free nature will stay - but some people may become ineligible.

- And working for families costs $2.2 billion a year - it's likely to be cut for those on high incomes.

“None of the recommendations I have seen are radical,” says Mr Key.

But Labour leader Phil Goff sees things differently.

“This is their agenda and they're not wasting a good crisis to justify it,” he says.

The Government spends $70 billion every year - cutting $800 million is just one percent of what it spends.

But remember it's already cut $4 billion from spending over the past two years - so it's getting harder and this time some big and popular programmes are being targeted.

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Comments

09 May 2011 10:40a.m.

Susan wrote:

Why is it that when a good savings scheme is put in place in this country the Government of the day has to mess around with it. John Keys decision to take away 2% of the employers input is bad enough, but to now take away either some or all of the $1000 Govt puts in will probably screw it up all together. I think it should be set up so no incoming Political Party can change it then we can be protected for investing in our future. Rather than take this road to find ways to save $800m how about all Politicians take a wage cut or Donate 10-20 % of their wages to Christchurch. Roll on the next Election!!!

23 Mar 2011 08:25p.m.

James J. Read wrote:

Thank goodness for Simon's practical suggestion. Yes, if we raised our output, we would not need to be constantly talking of cuts. To take two very different countries, Australia and Switzerland, why do you suppose they are more prosperous than ourselves? Perhaps we could learn something from them.Whilst we only have to persuade Maori and Pakeha to live together, the Swiss have to deal with 4 language groups and make a far better job of it.

23 Mar 2011 07:17a.m.

Wiseacre wrote:

Of course the Don Brash led 2025 Taskforce has to go. It's already served it's purpose of providing extreme suggestions that John Key can dismiss so as to appear 'moderate' - it was only ever about manipulating the public. They certainly can't keep it around in an election year, showing how we are falling behind Australia at an ever increasing rate - far too embarrassing for the government.

22 Mar 2011 11:09p.m.

Helen wrote:

Lets save some money and scrap the proposed Ministry of Christchurch.

redirect the money yo actually creating jobs down there and not a holiday resort for the ever so uselesss Gerry Brownlie.

22 Mar 2011 10:34p.m.

Michael wrote:

Trust the Tories to make political capital out a catastrophe like the Christchurch earthquake. Has John Key no conscience?

22 Mar 2011 09:16p.m.

Damnitnz wrote:

Maybe if we got rid of the treaty all together they'd save more than 800 million?

22 Mar 2011 08:00p.m.

James J.Read wrote:

Let's be radical. If the Ministeries of Women's Affairs and Maori Development were scrapped, at a saving of millions,women and Maori would still have a voice in the government. So little do they contribute to the country's wellbeing, that most people couldn't name either minister.

22 Mar 2011 07:57p.m.

Chris wrote:

Sack all the politicians, or close their account at the florist and car valet.

22 Mar 2011 07:23p.m.

Simon wrote:

Maybe, if the country raises production - we wouldn't need to think of cutting so much to get $800m per annum.
Look, the Resource Management Act has decimated people trying to create any wealth in NZ. It really suits the 'sandle-wearers'. And Local Bodies have made a fortune from it. But it's stuffing NZ & the tax intake. Time to take the BRAKES OFF! I'm sure there's enough laws & procedures (apart from the RMA) that would regulate anyone 'borrowing to improve their lot & employing others'!

22 Mar 2011 06:52p.m.

Matt wrote:

I cant believe Phil Goff said JK is wasting a good crisis to justify it. That made me very angry. What was he thinking. Extremely insensitive and naive. No way he'll get my vote!