State of schools, hospitals 'worse than expected'

Prime Minister Jacinda Ardern speaking to reporters today. Photo: NZ Herald

The Government has given a gloomy warning about what is to come in the Budget, saying the state of schools and hospitals is much worse than expected and will require major investment.

However, Finance Minister Grant Robertson is staying firm the Government will keep paying off debt nonetheless.

He and Prime Minister Jacinda Ardern today gave reporters the first hint of what the public can expect in the books next month, summed up by the phrase: "We will not be able to address nine years of neglect in one Budget".

"We want to share the reality of what we are seeing in the lead-up to the Budget and just the scale of the investment and the rebuilding that needs to take place within our core services, like health and education," Ms Ardern said.

And while highlighting recent mould and rot problems at Auckland's Middlemore Hospital as a demonstration of the issues, the Prime Minister was adamant the problem went further than just buildings.

"There are some very basic needs that exist in both of these portfolios around just the delivery of services before you even look at the schools or the hospitals they're delivering them in," she said.

But for all the doom and gloom, the Finance Minister was adamant the Government would not be reneging on its election promise to get debt to below 20% of GDP within five years.

Some economic commentators have argued the Government has put itself in a financial straitjacket by both promising no new taxes while also committing to using surpluses to pay down public debt.

That's despite interest rates for borrowing sitting at the lowest levels in a century. "They are rules we clearly set out. We campaigned on them," Mr Robertson told reporters.

"It's always a balance ... New Zealanders want us to strike that balance and I believe we've done that."

Ardern argued the Government would still be investing more than National had proposed - with a slightly slower debt-repayment plan and the scrapping of promised tax cuts.

"[Voters] want us to reinvest in those core services ... But they also want us be careful," she said.

"They want us to be ready for any potential shocks we may face in the future."

The Budget will be delivered on May 17.