web analytics

What will Key cut?

Written By: - Date published: 10:37 am, February 1st, 2011 - 26 comments
Categories: education, public services - Tags: ,

The early childhood education cuts have hit – families will face an average $20-$45 a week increase in the cost of sending a kid to kindy. And Anne Tolley is signaling more to come. But it’s not just the education of the next generation that’s for the chop as National seeks to balance the books after its tax cuts for the rich binge.

This year, the government will spend $70 billion. With inflation expected to be 5% this fiscal year and population growth of 0.9%, just to stay even in real per capita terms government spending needs to go up by about $4 billion. That’s just reality. Instead, the government will only increase it by $700-$800 million, a 1% nominal increase but a 5% cut after inflation and population growth.

Where will it come from?

Key (aping David Cameron) says Health will get the basic increase it needs. A 6% increase on its $14 billion  budget is enough to eat all the extra budget allocation and a bit more once you count the extra needs of the aging population.

The increase in the cost of social welfare, including superannuation, is unavoidable. Benefits and super are automatically adjusted for inflation and people will keep on hitting 65. Even if unemployment numbers finally start to fall a little, it’s a drop n the ocean compared to the $9 billion a year bill for super. Key has pledged not to alter the pension and I seriously hope he’s not stupid enough to prolong the recession with benefit cuts like National did in 1991. So, that’s another $22 billion, rising by $750 million next year, locked in.

We can also rule out cutting finance costs – the money we pay in interest to our debtors, which is projected to rise by $600 million to $3.6 billion next year. And the Crown’s legal obligation to the Government Superannuation Fund – $300 million rising to $360 million.

$40 billion gone, $30 billion to go and we need to cut $1.4 billion just  to cover increases in the welfare, borrowing, and health bill.

I’m going to rule out nominal cuts for Police, Transport, and Defence – leaving them just the 6% cut due to inflation and population growth.

$22 billion left, $1.4 billion in cuts plus no inflation and population adjustments.

The only thing of any significance left is education with its $12 billion budget. Either it takes a big 10% cut or the assorted other small budget departments (Conservation, Housing, MFAT/aid, Customs/Biosecurity, MED, IRD, Morst etc) and Kiwisaver inducements will have to take savage cuts on the order of 20% in real terms.

I think we’re going to see cuts to early childhood and tertiary education, possibly the re-introduction of interest on student loans. Kiwisaver tax credits will be canned and there will be widespread cuts of 10-20% for departments, which means a less capable government (pray for no more major disasters) and more costs being lumped on to households.

All of this is completely unnecessary, just like asset sales. National did not have to borrow billions for tax cuts for the rich. And public debt is not at crisis point – we’re projected to be back in surplus in four years. No, this is all about ideology.

National has manufactured a ‘crisis’ to justify an agenda of tax cuts, public service cuts, and privatisation, which will undermine our future by weakening education and research, reducing private savings, and increasing foreign ownership of our strategic assets.

26 comments on “What will Key cut?”

  1. Bunji 1

    And indeed they’re already floating further cuts to ECE…

    National Ltd: Selling New Zealand’s Future.

  2. Anthony C 2

    Well he can’t cut research funding because that paid for the first tax cuts…

    Maybe tertiary education with the last sprinkle of Kiwisaver on top.

    Kiwisaver will be a pity too, speaking for myself my Kiwisaver has clawed back the loss from the GEC and is now growing, seems like a bad time to slice it even more.

  3. One could just as easily ask where the $1.8b in additional spending that Phil Goff has promised just in the last week will come from

    • Blighty 3.1

      from closing tax loopholes, new top tax rate, scrapping the new missile system, ring-fencing property losses (and hopefully canning motorway projects)

      • Uncle Helen 3.1.1

        Scrapping welfare handouts, introducing a flat income tax that’s the same for everyone, removing the right to vote for anyone who doesn’t pay tax or obey the law, dismantling the entirely useless 90% of the civil service that’s engaged solely in wealth redistribution.

    • Anthony C 3.2

      Yes one could if you were looking to misdirect. But last I checked National have the treasury benches for Budget 2011.

  4. It is called a strategic deficit Martyg, a strategic deficit …

    • Shane Gallagher 4.1

      All a ploy to create a crisis and then sell the country’s last assets to their rich mates here and overseas.

      The national standards in education are all about privatizing education… and then on to health (expect a crisis in the funding the health service soon).

      We have just seen the biggest transfer of wealth from the poor to the rich since the 1920s in the current financial crisis and NACT are just sweeping up the last scraps here in NZ for their rich buddies.

      Anti-spam: tricks – so appropriate!

  5. In some areas 40 % of 3 year olds are not in early child education according to Tolley. Nothing is being done to encourage this group. Were I the minister I would put my resources into getting all 3 year olds into ECE, instead the focus is on National Standards. Someone needs to explain to parents/caregivers the benefit of even 10 hours a week for a 3 year old attending ECE.

    Tolley if there are no kindergatens and child care centres in an area why not?

    Tolley has put the cart before the horse regarding the education of 3 year olds in particular.

  6. Lanthanide 6

    It seems quite unlikely they would introduce interest on student loans in 2011. They’ll save that up for 2012 after they’re re-elected.

    People voted for National for their promise of $50/week tax cuts and that they weren’t going to touch interest-free loans. Lots of idealistic young idiots bought it, and I think they’d very quickly go back to the left if National tried to do that.

    Having said that, though, National did bring in the 10% bonus for early repayments in 2009. I said at the time “here’s the carrot, where’s the stick?”. The stick is obviously interest back on student loans – maybe they’ll just stick it in at a low rate like 3% + retain the 10% bonus, so that way people can’t complain about how generous they’re being.

  7. Deadly_NZ 7

    And the Savings working group report is out too here’s a link I put it up on Google docs for any who want it.

    https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=1eClXgZnVWjqGeIpR0nkUuL7RM3KiTDuBBZ9wBHK3GbNanKf8HWRzTApGu_tj&hl=en_GB&authkey=CNX3g_QF

    And as usual there’s granny Herald still spouting FUD for the NACTS that we are in danger of falling like Greece. What a load of Horseshit they are lumping all the private debt in just like every other article the write or is it more like Propaganda that they Spew ?

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10703400

  8. randal 8

    the one thing he is not going to cut is the amount his friends are going to make when they stag the share floats of privatised (read: looted) state assets

  9. Graham 9

    If a tiny percentage of the population were stopped from leeching most of the countries resources and cash, then the budget problem would be solved.

    A lot of these proposed cuts are going to create more unemployment now and in the future.

    • Colonial Viper 9.1

      Graham, don’t fuss, if unemployment is truly increased by these measures, employers will have more power to suppress the ages paid to labour.

      Surely this is a very good thing for business in NZ. Ahem, and Australia.

  10. tsmithfield 10

    I think Key is hooking into a change of mood in the electorate. Otherwise, why would he be talking tough about cuts in the budget etc in election year? Perhaps promising less this year will actually be more in terms of votes.

    It seems to me that people are waking up to the fact that we can’t go on borrowing money indefinitely. Sure, our government debt is currently quite low by international standards. However, at the rate at which we’re borrowing, it won’t take long to become a major problem. Also, overseas creditors look at the combined government and private debt as an indicator of the creditworthiness of the nation as a whole, so the government needs to do as much as possible to ensure its side of the equation is going the right way.

    Perhaps people are waking up to the reality that its better to make some hard decisions now rather than have harder ones imposed on us later.

    • Irascible 10.1

      So if the people are waking up to the issues around borrowing why hasn’t it dawned on Key & English? All I read & hear is the mantra if we sell off the state assets we can spend the money while continuing to borrow to pay off those, like Key & English, who received the big tax cut benefits under the successive NACToid budgets.
      Face it TS your great political lover is a financial failure – escpecially on the macro-economic level.

  11. sean14 11

    Looking at it another way, where will Phil get the money from?

    • Anthony C 11.1

      You know what ‘looking at it the other way’ actually means don’t you?

      For your future reference the “it” suggests looking at a topic from a different angle, not looking at different topic altogether.

    • Lanthanide 11.2

      Reversing unaffordable tax cuts that National irresponsibly gave to the top 10% of income earners.

      Next.

      • sean14 11.2.1

        Won’t even come close to Phil’s inexhaustible appetite for spending.

        Next.

        • Colonial Viper 11.2.1.1

          Apart from the small fact that the last LAB government had 9 consecutive budget surpluses.

          And under Bill and John’s fiscal incompetence, NZ is headed for 3 strikes out with a ballooning deficit.

          ‘Next’ Government needed is correct.

  12. Afewknowthetruth 12

    No action within the current paradigms will get us out of the very deep hole we are in, a hole that all previous governments -both National and Labour- were digging for years by borrowing and squandering. .

    The NZ economy is critically dependent on imported energy in the form of oil, and the price of Brent oil has just about reached $100, up 40% from what it was 6 months ago: since we import around 4/5 our oil, that will blow a huge additional hole in the government’s budget.

    The only thing that will cause the oil price to drop significantly is collaspe of the global econmy. Catch-22

  13. prism 13

    Aft..truth – Labour repaid debt. Can’t be accused of borrowing and squandering in such a cavalier fashion just so you can made a grand statement of disgust. They didn’t do some things that would have helped the country but let’s look at the facts. The oil price is going to impact badly and ‘blow a huge additional hole in the govt’s budget’, that’s a fact to be concerned about.

  14. Draco T Bastard 14

    The biggest problem with all the political parties is that they believe that the economy = money when the economy is the resources we have and how we use/renew them.

  15. Bored 15

    The things Key can be relied upon to cut are:
    * taxes for the rich.
    * access to basic social services to pay for the cuts.

    The rest he will flog off, if it aint nailed down it will be fire saled to his mates. In Russia they call this kleptocracy.

Links to post

Recent Comments

Recent Posts

  • Brexit vote costs NZ effective EU voice
    Despite being extremely close the result of the referendum in Britain reflects the majority voice, Labour’s Foreign Affairs spokesperson David Shearer says. “While we respect the decision to leave the EU, it goes without saying the move will usher in ...
    14 hours ago
  • Pasifika Education Centre doomed
    The Pasifika Education Centre appears doomed to close down this December, says Labour’s Pacific Island Affairs spokesperson Su’a William Sio  “In a written question I asked the Minister whether he would put a bid in for more money. His answer ...
    21 hours ago
  • Onetai Station review a shameful whitewash
    A report released today on the Overseas Investment Office’s (OIO) good character test is a whitewash that does nothing to improve New Zealand’s overseas investment regime, says Labour’s Land Information spokesperson David Cunliffe. “The review of the good character test ...
    21 hours ago
  • We need a national strategy to end homelessness now
    Long before I entered Parliament, housing and homelessness were issues dear to my heart. I know from personal experience just how hard it is to find an affordable home in Auckland. In my maiden speech, I talked about how when ...
    GreensBy Marama Davidson
    1 day ago
  • Capital feels a chill economic wind
      Wellington is on the cusp of recession with a sharp fall in economic confidence in the latest Westpac McDermott Miller confidence survey, says Labour’s Regional Development spokesperson David Clark.  “Economic confidence amongst Wellingtonians has dropped 12% in the past ...
    1 day ago
  • Dive school rort took six years to dredge up
    News that yet another private training establishment (PTE) has rorted the Government’s tertiary funding system since 2009 shows that Steven Joyce has no control of the sector, says Labour’s Associate Education (Tertiary) spokesperson David Cunliffe. “Like Agribusiness Training and Taratahi, ...
    2 days ago
  • National’s housing crisis hitting renters hard
    National’s ongoing housing crisis is causing massive rental increases, with Auckland renters being hit the hardest, says Labour’s Housing spokesperson Phil Twyford. ...
    2 days ago
  • A Day with the PSA
    This week, along with Labour MP Kris Faafoi, I accepted an invitation to spend a day working alongside the good folk at the Public Service Association in Wellington. As the Workplace Relations and Safety spokesperson for the Greens, I was ...
    GreensBy Denise Roche
    2 days ago
  • A Day with the PSA
    This week, along with Labour MP Kris Faafoi, I accepted an invitation to spend a day working alongside the good folk at the Public Service Association in Wellington. As the Workplace Relations and Safety spokesperson for the Greens, I was ...
    GreensBy Denise Roche
    2 days ago
  • Government holds Northland back
    New information shows Northland remains the most economically depressed region in New Zealand, says Labour’s Regional Development spokesperson David Clark. “The latest Westpac McDermott Miller regional survey found that more Northlanders believe their local economy will deteriorate this year than ...
    2 days ago
  • Rebstock report into MFAT leaks a disgrace
    An Ombudsman’s report on the Paul Rebstock investigation into MFAT leaks shows the two diplomats at the centre of the case were treated disgracefully, says Labour’s State Services spokesperson Kris Faafoi.  “The Ombudsman says one of the diplomats Derek Leask ...
    2 days ago
  • More families forced to turn to food banks for meals
    Increasing numbers of families are having to go to food banks just to put a meal on the table, according to a new report that should shame the Government into action, says Labour’s Social Development spokesperson Carmel Sepuloni. ...
    2 days ago
  • We have a housing emergency in New Zealand
    Auckland, New Zealand, where house prices have risen 20 percent in the last year alone We have a housing emergency in New Zealand.  Like many people we are ashamed and angry that in a wealthy country like ours, we have ...
    GreensBy Eugenie Sage
    3 days ago
  • We have a housing emergency in New Zealand
    Auckland, New Zealand, where house prices have risen 20 percent in the last year alone We have a housing emergency in New Zealand.  Like many people we are ashamed and angry that in a wealthy country like ours, we have ...
    GreensBy Eugenie Sage
    3 days ago
  • Aussie reforms signal trouble ahead for school funding plan
    Plans by the Government to return to bulk funding are likely to see increased class sizes and schools most in need missing out on much-needed resources, Labour’s Acting Education spokesperson Grant Robertson says. “The signaled return to bulk funding is ...
    3 days ago
  • Toxic Sites – the down low on the go slow
    In  2011, I negotiated an agreement with the National Government to advance work on cleaning up contaminated sites across the country. This included establishing a National Register of the ten worst sites where the creators of the problem could not ...
    GreensBy Catherine Delahunty
    3 days ago
  • Aucklanders face new motorway tax of up to $2500 a year
    The Government wants to tax Aucklanders thousands of dollars a year just to use the motorway network, says Labour’s Auckland Issues spokesperson Phil Twyford. “Officials estimate the average city commute is 11.8km. This means for the average Aucklander commuting five ...
    3 days ago
  • 15 corrupt bank managers identified in student fraud
    New information show 15 bank managers in India have been identified by Immigration New Zealand as presenting fraudulent documents on behalf of foreign students studying here, Labour’s Immigration spokesperson Iain Lees-Galloway says. “Documents obtained by Labour under the Official Information ...
    3 days ago
  • National leaves Kiwi savers the most vulnerable in OECD
    News last week that Israel’s Finance Minister will insure savers’ bank deposits means New Zealand will be left as the only country in the OECD that has no deposit insurance to protect savers’ funds should a bank fail. Most Kiwis ...
    GreensBy James Shaw
    4 days ago
  • Comprehensive plan for future of work needed
    A Massey University study showing many New Zealanders are unaware of the increasing role of automation in their workplace, highlights the need for a comprehensive plan for the future of work, says Grant Robertson, Chair of Labour’s Future of Work ...
    4 days ago
  • Another National Government failure: 90 day work trials
    On Friday last week, the Treasury released a report by MOTU economic consultants into the effectiveness of the controversial 90-day work trial legislation. The report found that there was “no evidence that the policy affected the number of hires by ...
    GreensBy Denise Roche
    4 days ago
  • Iraq mission extension case not made
    The Prime Minister has not made the case for extending the Iraq deployment another 18 months nor the expansion of their mission, says Opposition Leader Andrew Little.  “Labour originally opposed the deployment because the Iraqi Army’s track record was poor, ...
    5 days ago
  • Denial is a long river
    William Rolleston from Federated Farmers made the absurd claim on RNZ on Saturday that “we actually have very clean rivers”. This statement doesn’t represent the many farmers who know water quality is in big trouble and are working to clean ...
    GreensBy Catherine Delahunty
    5 days ago
  • Denial is a long river
    William Rolleston from Federated Farmers made the absurd claim on RNZ on Saturday that “we actually have very clean rivers”. This statement doesn’t represent the many farmers who know water quality is in big trouble and are working to clean ...
    GreensBy Catherine Delahunty
    5 days ago
  • Melanoma deaths could be avoided by an early access scheme
      The tragic death of Dunedin’s Graeme Dore from advanced Melanoma underlines the cruelty of this Government in promising a treatment but delaying for months, says Labour’s Health Spokesperson Annette King.  “Graeme was diagnosed with Melanoma last year. He used ...
    5 days ago
  • Assessing the Defence White Paper
    The Government’s recently released Defence White Paper has raised questions again about New Zealand’s defence priorities, and in particular the level and nature of public funding on defensive capabilities. The Green Party has a longstanding belief that priority must be ...
    GreensBy Kennedy Graham
    5 days ago
  • Kiwis’ confidence drops again: Economy needs a boost
    Westpac’s consumer confidence survey has fallen for the seventh time in nine quarters, with middle income households ‘increasingly worried about where the economy is heading over the next few years’, says Labour’s Finance spokesperson Grant Robertson. “This survey is a ...
    5 days ago
  • Relocation grant simply kicks can down the road
    The response by state house tenants and social agencies to the Government’s rushed plan to shift families out of Auckland tells us what we already knew – this is no answer to the chronic housing shortage, Opposition Leader Andrew Little ...
    5 days ago
  • Peace hīkoi to Parihaka
    On Friday a Green crew walked with the peace hīkoi from Ōkato to Parihaka. Some of us were from Parliament and some were party members from Taranaki and further afield. It was a cloudy but gentle day and at one ...
    GreensBy Catherine Delahunty
    5 days ago
  • Children’s Commissioner right to worry about CYF transition
    The Government must listen to the Children’s Commissioner’s concerns that young people under CYF care could be ‘negatively impacted’ as the new agency’s reforms become reality, says Labour’s Children’s spokesperson Jacinda Ardern. “Dr Russell Wills has used the second annual ...
    5 days ago
  • Bill English exaggerates PPL costs to justify veto
    The Finance Minister has used trumped-up costings to justify a financial veto against parents having 26 weeks paid parental leave, says Labour MP Sue Moroney. “Bill English’s assertion on RNZ yesterday that the measure would cost an extra $280 million ...
    7 days ago
  • Government must refund overcharged motorists
    Labour is calling on the Government to refund motor registration fees to three-quarters of a million Kiwi motorists whose vehicles were wrongly classified under National’s shambolic ACC motor vehicle risk rating system, Labour’s ACC spokesperson Sue Moroney says.“Minister Kaye’s ridiculous ...
    1 week ago
  • 90-day work trials an unfair failure which must change
    A new Treasury report shows the Government’s 90-day trials haven’t helped businesses and are inherently unfair, Labour’s Workplace Relations spokesperson Iain Lees-Galloway says. “The Motu report found that 90-day trial periods had no impact on overall employment and did not ...
    1 week ago
  • Massey East houses a start but Nick Smith should think bigger
    The Massey East 196-home development is a start but the Government must think bigger if it is to end the housing crisis, Labour’s Housing spokesperson Phil Twyford says. “It is great the Government is finally realising it needs to build ...
    1 week ago
  • More changes needed to ensure fewer cases like Teina Pora’s
    Teina Pora spent 21 years behind bars for a crime he didn’t commit, shafted by a Police investigation that prioritised an investigator’s hunch over the pursuit of credible evidence. Yesterday’s announcement that the government is to pay him $2.5m in ...
    GreensBy David Clendon
    1 week ago
  • New Zealand Labour sends condolences to UK
    The New Zealand Labour Party is sickened and saddened by the murder of British Labour MP Jo Cox, Labour Leader Andrew Little says. “Ms Cox was killed in cold blood while simply doing her job as a constituent MP. She ...
    1 week ago
  • Shameful refugee quota increase still leaves NZ at the bottom of the list
    Minister for Immigration Michael Woodhouse announced this week that the government will put off increasing the refugee quota by 1000 places until 2018.  It’s a shameful decision that undermines the Government’s claim that it takes its international humanitarian obligations seriously, ...
    GreensBy Denise Roche
    1 week ago
  • Paula Bennett as a victim hard to swallow
    The National Party spin machine has gone into overdrive to try and present Paula Bennett as the victim in the Te Puea Marae smear saga, says Labour Housing spokesperson Phil Twyford. “Bill English in Parliament today tried valiantly to paint ...
    1 week ago
  • Voters to have the final veto on paid parental leave
    New Zealanders will have the final right of veto on a Government that has ignored democracy and is out of touch with the pressures and demands on families, says Labour MP Sue Moroney. “Today’s decision by National to veto 26 ...
    1 week ago
  • Collins should put Kiwis’ money where her mouth is
    Labour’s Police spokesman Stuart Nash is calling on anyone who has received a speeding ticket for going up to 5km/h over the 100km/hr open road speed limit to write to him and he will take it up on their behalf ...
    1 week ago
  • Where is the leadership on equal pay for work of equal value?
    The gender pay gap in the public service is worse than in the private sector. I’ve always found this particularly galling because I expect our Government to provide an example to the private sector on things like human rights, rather ...
    GreensBy Jan Logie
    1 week ago
  • Kiwis’ real disposable income goes nowhere for the year
    New Zealanders’ hard work for the last year resulted in no increase in real disposable income, showing Kiwis aren’t getting ahead under National, says Labour’s Finance spokesperson Grant Robertson. “Today’s GDP figures reveal that real gross national disposable income per ...
    1 week ago
  • Pora case a case to learn from
    Conformation that Teina Pora will receive $2.5million from the Crown for more than 20 years of wrongful imprisonment does not fix the flaws in our system that led to this miscarriage of justice, Labour’s Justice spokesperson Jacinda Ardern says. “The ...
    1 week ago
  • Government needs to start again with RMA changes
    The National Government’s proposed changes to the Resource Management Act have attracted more than 800 submissions, many of them critical of key aspects of the Resource Legislation Bill. There has been much criticism of the new regulation making powers given ...
    GreensBy Eugenie Sage
    1 week ago
  • Bennett’s briefing completely unacceptable
    It is completely unacceptable that Paula Bennett briefed her political staff on the police investigation into Hurimoana Dennis after her meeting with him, despite it having nothing to do with her social housing portfolio, says Labour’s Housing spokesperson Phil Twyford. ...
    1 week ago
  • Speech to Green Building Council
    Building smarter, greener cities It will be clear to anyone who has been watching the public debate on the housing crisis that housing in New Zealand is sadly far from being economically sustainable when Auckland has the fourth most unaffordable ...
    1 week ago
  • Paula Bennett has more questions to answer
    It is unthinkable that Paula Bennett’s press secretary went rogue and tried to smear the reputation of someone involved in helping the homeless, Labour’s Housing spokesperson Phil Twyford says. “Political staff would not take such serious unilateral action without the ...
    2 weeks ago
  • Speech on Notice of Motion on Orlando
    Mr Speaker, The Labour Party joins with the government in expressing our horror at this atrocity and our love and sympathy are with the victims and their families. Our thoughts are with the people of Orlando and of the United ...
    2 weeks ago
  • Tiakina Ngā Wai – Swimmable Rivers Report June 2016
    The campaign to clean up our rivers was launched at the Green Conference at Queens Birthday weekend. However, the work prior to the launch goes back a number of years. Russel Norman and Eugenie Sage deserve full credit for the ...
    GreensBy Catherine Delahunty
    2 weeks ago
  • We can do more: Refugee quota should be doubled
    New Zealand is a better country than National’s miserable increase in the refugee quota that ignores our obligations to the international community and people in need, says Opposition Leader Andrew Little. “It is a sad day when the Government can’t ...
    2 weeks ago

Public service advertisements by The Standard

Current CO2 level in the atmosphere