Public sector innovation needed in years ahead

Public sector innovation needed in years ahead

Public sector restraint and innovation will be needed for years to come to improve the quality of frontline services, while also ensuring New Zealand climbs out of deficit and controls its debt, Finance Minister Bill English says.

"Although our economy has now been growing for a year, we are still looking down the barrel of five more years of deficits," Mr English said in a speech to the Australia New Zealand School of Government in Melbourne today.

"Even when we get back to surplus, there will be strong competing demands on Government spending – high Government debt will need to be repaid and, when surpluses permit, we will resume contributions to the NZ Super Fund.

"Therefore we are likely to require surpluses of at least 2 per cent of GDP before we even have the choice of significantly increasing public spending.

"In our first two Budgets, we have reprioritised almost $4 billion of spending over five years – about 1.1 per cent of our total spending – to put back into vital frontline services in areas like health, education and law and order.

"We now face a far more challenging task - finding further savings so we can improve the quality of our public services within tight fiscal constraints. We also need to rebalance our economy away from excessive Government spending and towards savings, exports and sustainable growth.

"We are laying the foundations for a public service that chooses innovation and change. We have left existing structures largely in place and pushed responsibility for managing resources clearly on to public sector chief executives, rather than the Treasury or the Minister of Finance.

"Longer-term effective change is driven by people who know the business, clearly understand the parameters they are working to and have the tools they need to implement change.

"It's not an option for the public sector to wait out these challenges. Hope is not a strategy. And it won't work because the New Zealand public want to see evidence that the public sector is living within its means, as New Zealanders are themselves."

ENDS