Breaking: Labour slashing $4b in 4 years

Finance Minister announces spending cuts on contractors, consultants and baseline spending in non-frontline areas; Operating spending cuts of $3.42b over 4 years; Capex cuts of $450m

In the face of a deteriorating global economy and tax revenue falling short of Treasury’s forecasts, Hipkins and Robertson have announced tough calls on spending. File Photo: Lynn Grieveson / The Kākā

TL;DR: The Labour Government has announced plans to cut $4 billion in spending over the next four years, including $3.4 billion through consultants, contractors and non-frontline budgets, along with $450m less in capital spending.

The cost-cutting measures include:

• public sector agencies cutting consultant and contractor spending back to pre-Covid levels of under 11% of workforce spending from 14.6% in 2021/22, which will cut such spending by 18% or about $165 million per year;

• public sector agencies representing 19% of the overall Budget spending being directed to trim one or two percent off their existing baselines, which means benefits, frontline health, frontline education, Police, Parliament and Defence spending are unaffected;

• underspends from past budgets and money not used in existing programmes are included in the overall cuts of almost $4 billion over four years up to and including 2026/27;

• cutting of budget allowances for unspecified new spending in the 2025/26 (by $250 million) and 2026/27 (by $500 million) years; and,

• cutting of various uncompleted programmes for cutting climate emissions, planting native trees, investing in Research and Development, dealing with Covid-19, building transitional houses and promoting tourism.

Paying subscribers can see full details in attached documents and graphics below the paywall fold.