When John Key did his State of the Nation Speech and announced that he was cutting “new spending” to $800 million, I wrote a post on what that level of cut could mean for public services.
But now, in the wake of Christchurch, John Key says they will try to cut even that $800 million.
Rejecting the Green’s idea of a small levy which would raise over $1billion per year1, they plan to borrow $5billion and pay it back over time by slashing public services. That would be $5 billion of borrowing that was, of course, previously impossible to do according to Bill English.
But what will those new levels of cuts mean?
John Key says there will still be “$600, $700, $800 million” extra for health and education. This will still not be enough for any pay increases for Nurses, Doctors and Teachers. It will not be enough to match the increased number of people wanting to use the health service as the population ages. It will not even be enough to stand still. But they will not bear the brunt.
Beyond Health and Education, the other big expenses are Superannuation and Benefits; but these don’t fit into public service spending budgets, and cannot be controlled in the same way.
So far worse is in store for the other departments. They were facing cuts in excess of 10% – now they face cuts in excess of 20%.
Prison officers can’t hold out much hope of a pay increase this year, despite having to deal with ever more dangerous double-bunking; but the prison budget can’t really be cut with an ever-increasing prison population meaning that the department will soon be the government’s largest.
So even bigger cuts for the rest then. What does a 25% cut to the police budget mean? A 25% cut to social services, that Paula Bennett is already scape-goating for being too stretched to cope? A 25% cut to bio-security which already let through a number of outbreaks last year (incl. the potentially crippling kiwifruit canker)?
Hopefully a big cut will be made to Transport in the areas of the Holiday Highway, Transmission Gully, and other Roads of NationalTM Significance that don’t make economic sense. One gets the impression that Auckland’s Central Rail Loop won’t get funded, despite an astoundingly good return on investment (if Steven Joyce ever went on an Auckland commuter train he’d soon see why it’s so necessary).
But more than that will be needed to save other departments. Justice? Department of Labour? Housing? They’re coming after you….
1 Green’s proposal is for 1.5 per cent on income between $48,001 and $70,000 and a 3 per cent levy on income above $70,000, no change in corporate tax