Tuesday, March 22, 2011

What "no new spending" actually means

Yesterday, John Key announced that there would be no new spending in this year's budget. In order to meet the costs of the Christchurch earthquake, the government was going to cut everywhere else, reducing its already penurious $800 million allowance for new spending to nothing. Health and education would still get an increase (purely so they can respond to cries of "cuts" with claims that they are spending more money than ever before), but this would come at the expense of savings elsewhere.

Over on The Standard, Marty G analyses what this means for other government spending. And the answer is that it is dire. Depending on what is locked in, the remaining departments are looking at cuts of between 18 and 32 percent. That means shutting down between a fifth and a third of their current services, sacking between a fifth and a third of their staff. We haven't seen this sort of slash and burn exercise since the 90's, last time National was in power. In fact, even Ruth Richardson's infamous "Mother of all Budgets" didn't do this. What we're looking at here is a truly radical exercise, using a natural disaster as an excuse for a wholesale attack on core government services. Meanwhile, of course, the rich's tax cuts remain sacrosanct. So, rather than the burden being shared equitably, it'll be the poor who will pay for the earthquake, while people like John Key sip champagne and laugh.