PM says DHBs in much worse position than expected

Updated

Prime Minister Jacinda Ardern has issued a stark warning ahead of the May 17 Budget, saying the Government had discovered the budget situations in Health and Education were much worse than she expected when in Opposition.

Ardern and Finance Minister Grant Robertson made the comments at a post-cabinet news conference when talking about the Government's current Budget deliberations.

However, Ardern said the Government remained committed to its Budget Responsibility Rules, which include continuing to run surpluses and reducing debt to 20 percent of GDP within five years of taking office (from around 23 percent currently).

She said the Government would not be able to do as much as fast as she had initially hoped because of the amount of under-investment and under-funding by the previous government.

Ardern said the Government would publicise more detail around the level and type of under-funding in coming days and weeks ahead of the Budget.

“I had to dampen down my (expectations) when I saw the state that the last government left core services like health and education. I always said from the beginning we thought it would be bad. We didn’t know it would be this bad, and what the public is seeing is just a snapshot," she said.

"In every portfolio I’ve seen off the top of my head I’ve seen deficits."

Ardern repeatedly said the deficits were not just in capital expenditure, but in operating expenditure.

“It’s not just what people will see in the walls and the buildings, it’s whether or not there was enough preparation for very simple things, for very simple preparation for what we were facing in other areas, and we will build a case for that as we build up for the Budget as well.”

Robertson also downplayed expectations for the Budget.

“The package will be an important step in rebuilding those public services, but one Budget cannot make up for nine years of neglect," he said.

He also rejected suggestions of changing the length of the debt repayment track.

“They are rules we clearly set out, we campaigned on them. I believe we can do the things we need to do to begin rebuilding the critical public services New Zealanders need with that framework," he said.

“Obviously the economy has continued to deliver above the forecasts that were made. That’s a useful thing for the Minister of Finance but I’ve got to be very careful making decisions about that money and whether or not we spend it or how we spend it, but clearly it’s factoring into our Budget considerations.”