Budgets to be cut to pay for rebuild - Key

Some government programmes will be axed as budget spending is cut to pay for rebuilding Christchurch, Prime Minister John Key says.

He confirmed today that most, if not all, of the $800 million "new money" spending originally planned for the May budget would go.

There would still be between $600m and $800m extra spending for health and education, but it would come from cuts in other areas.

"I wouldn't expect there to be a lot of new spending, if there is any, in the budget," he said at his post-cabinet press conference today.

"We think that by looking very carefully...we can free up money to effectively fund the increases in health and education."

Mr Key said there were three or four weeks to go before the budget had to be finalised and all the options were being considered.

"Some programmes will cease, no one is arguing this is easy," he said.

"Government is all about the allocation of resources and at the moment the allocation that is required is Christchurch, health and education.

"On that basis, some other expenditure won't be undertaken."

The Public Service Association (PSA) said cutting $800 million of new spending would further strain services which were already under "massive pressure" because of the Canterbury earthquake, and would cost the country socially and economically.

"The Government is choosing to squeeze departments and services that have already been shaved to the bone, rather than considering other options like imposing a levy and further borrowing to help fund the Canterbury rebuild," PSA national secretary Richard Wagstaff said.

"The Government is leading the recession with its blunt cuts to public services...and when it comes to health and education, $800 million doesn't go near what these areas actually need."

Labour Party leader Phil Goff said pulling $800m out of the budget would be at the expense of services used by middle and low-income families.

"It's not a choice between slashing and burning and borrowing, it's also about getting the economy going again, having a plan, and National hasn't got a plan," Mr Goff said.

"Clearly, you can borrow to meet a cost that will need to be spread over a period of years -- and that's the situation with the earthquake."

Mr Goff said Labour would set a list of priorities going into the election.

"We will do what is essential first and what is desirable when we can find the funds," he said.

 

 

 

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