Budget frees up $1.8 billion for higher priorities

Budget 2010 has freed up another $1.8 billion over the next four years to put into high priority areas such as healthcare, education, law and order and scientific innovation, Finance Minister Bill English says.

"That is a big boost for this year's Budget and will make a real difference at a time when the Government's books remain under pressure from the aftermath of the global recession," Mr English says.

The money is in addition to the $1.1 billion annual operating allowance for new spending - effectively pushing spending on new Budget initiatives to $1.55 billion a year over the next four years.

"It means an extra $450 million a year can be spent in priority areas like health, education, law and order, and scientific innovation."

Total core Crown expenses are forecast to increase by $5.9 billion to $70.7 billion in 2010/11 - including adjustments to welfare benefits, New Zealand Superannuation, and Government interest costs on its rising debt, which all fall outside the operating allowance.

"This Government is strengthening frontline public services, but we are committed to spending taxpayers' money wisely and keeping debt under control. Weeding out lower priority spending plays a key role in meeting these goals," Mr English says.

It follows Budget 2009 redirecting $2 billion of lower priority spending into better frontline services in health, education and law and order.

"I expect this process to continue over the next three or four years, as we work hard to move back to Budget surplus as soon as possible," Mr English says.

"Public service chief executives are coming to terms with this reality. The Government has given them time to prepare their agencies to provide better public services with little or no new money over the next three or four years.

"It's clear from the work we've done so far there is considerable scope to provide better public services by improving processes, removing duplication and reallocating resources from lower quality spending to frontline public services."

Areas receiving the largest amounts of reprioritised money include student loans, early childhood education, social development, primary healthcare and corrections.

"The reprioritised money comes from an array of areas, ranging from the tightening of interest-free student loans eligibility criteria, to savings on administration in health and corrections. We have also put under-spending in some areas to better use," Mr English says.  

Average reprioritised spending of $450 million a year over the next four years represents less than 1 per cent of the Government's $70.7 billion in total annual spending.

"This Government will ensure future Budgets also get the most value for taxpayers out of that spending," Mr English says.