“PREFU has revealed that Labour’s budget doesn’t include enough funding to maintain real per-capita spending in areas like health and law and order. They’re going to have to dip into contingencies just to keep things going,” says ACT Leader David Seymour.
“Labour’s operating allowance isn’t high enough to take into account the impacts of inflation and population growth. Using Consumer Price Index forecasts, the Government needs to dip in for $882 million in contingencies just to keep the health system going in 2023/24, while in order to maintain health and law and order in 2024/25 they’ll be pinching $1.4 billion from contingencies.
"Robertson has claimed in response that it's ok to reduce health spending because, wait for it, there was $2.5 billion of COVID spending in the year from July 2022 through June 2023. This was after the first booster roll out was complete, the borders were opened and MIQ was shut down. If the Government really did spend $2.5 billion on COVID after it was over for all practical purposes, that is extraordinary waste. On the other hand, if it did not spend $2.5 billion on COVID from July 2022-June 2023, then it has undercooked the cost of healthcare going forward.
“Either that funding was essential to the health system and it will struggle without it, or it was a total boondoggle and taxpayers have been taken for a ride.
"Robertson also responded "The analysis also generates an independent estimate of the remaining operating allowance through subtracting the Government's baseline savings measures from the operating allowance." even if you accept his point, which we don’t, the effect of this statement makes no difference. Even if the Baseline savings are added to the operating allowance, there is still not enough money in the operating allowance to make the budget balance.
“This is deeply irresponsible from Grant Robertson. As Treasury put it in their guidance for setting budgets "Because most government expenditure does not automatically adjust for inflation, it is generally expected that changes to expenses and new revenue policies are funded from the operating allowance."
“Health Minister Ayesha Verrall even tweeted about the dangers of not increasing health spending with inflation earlier today, saying “The last time National said this health funding was frozen, meaning effective health cuts. Doctors and nurses missed wage increases and capital funding was foregone. Sewage ran down the walls of Middlemore Hospital. There is too much at risk with National.” Maybe Verrall should check in with her finance minister, or is she saying that Labour is implementing health cuts?
“Contingencies are by definition meant to be left for unpredictable circumstances. By using them just to maintain existing services, Labour is leaving New Zealand in a shocking position if and when the next Government faces some sort of crisis.
“This says a lot about Labour’s record. For one, they’ve increased spending by such an extraordinary amount that the country can’t afford it, public services haven’t improved with their spending and have in fact gone backwards. And Robertson knows he’s on his way out, so he has left a grenade for the next Finance Minister and is setting the country up for disaster. Kiwis deserve better than this.
“Now Grant Robertson’s destructive legacy has been laid bare, the need for real change in New Zealand’s direction has never been clearer. The next Government will need to take real action to balance its budget so Kiwis can balance theirs.
“There is a path back to fiscal responsibility, it starts with being brutally honest about the current situation. After years of doing less with more, the next Government must do more with less, just like Kiwi households and businesses are forced to do thanks to Grant Robertson’s irresponsibility.
“ACT has explained exactly where serious reductions in Government spending could be made. In the coming week we will do more as we update our alternative budget for the sobering reality Treasury just revealed.
“New Zealand needs ACT for real change.”