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Ardern warns some new policies 'reprioritised'

Ardern warns some new policies 'reprioritised' as core public service neglect comes first

By Pattrick Smellie

April 9 (BusinessDesk) - Prime Minister Jacinda Ardern is foreshadowing disappointment ahead on the delivery of some promised government policies as her Cabinet grapples with what it says is worse than expected underfunding in core public services such as health and education.

"New Zealanders need to know that we are willing to prioritise," she told her weekly post-Cabinet press conference, which she attended with Finance Minister Grant Robertson, who will deliver his first Budget on May 17. "We’ve had to make some hard decisions. The decision we’re making is that we’ll balance the books while injecting back into the core services that New Zealanders expect like health, like education, like building housing.

"We’ve had to reprioritise some of our own priorities, the things we went into the Budget looking at, because of the nature of the underinvestment we’ve seen."

She declined to comment on areas where the government may not be able to pursue its policy aims, saying that would have to wait for the Budget.

Among policies where some progress had been expected are funding for research and development tax credits, additional capital to patch up or replace ageing defence equipment, and more prison-building to cope with overcrowding caused by increasingly lengthy sentencing, and additional funding for public broadcasting.

Today's statements by Ardern and Robertson also indicate how the government intends to blunt several weeks on the political back foot, during which time the new National Party leader, Simon Bridges, has been able to exploit various political missteps by government ministers.

In coming weeks, the government would be presenting a "vivid picture of why we need to reinvest," said Ardern, with the primary focus on health and education services. Shortfalls were not just in capital spending to improve facilities, but also in operational spending to ensure service levels were maintained.

The government is facing significant pay claims from nurses and teachers, two of the largest groups of public sector employees.

"We want to share the reality of what we’ve seen in the lead-up to the Budget – just the scale of the rebuilding that’s needed," she said.

However, both Ardern and Robertson insisted a multi-year reinvestment plan could be achieved without breaching the government's self-imposed Budget Responsibility Rules, which require it to run budget surpluses over the economic cycle, reduce net Crown debt to 20 percent of Gross Domestic Product by 2022, and maintain government spending at around 30 percent of GDP.

The rules created the discipline for the government's spending plans and were important for ensuring New Zealand was insulated against both global and local shocks, such as a global downturn or earthquake repairs.

"We know we can do that. We can make important, progressive changes and deliver to New Zealanders the services that they need and keep the books in a healthy picture," said Robertson.

Ardern said she had had to dampen her own ambitions for new policy implementation since coming into office.

"We always said from the beginning we thought it would be bad. We didn’t know it would be this bad," she said, with under-investment apparent across "almost every portfolio".


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