The government’s health and education services are underfunded. That is what the next three fiscal years are about.
They are underfunded because the economy hasn’t been growing fast enough. So the next three economic policy years are primarily about getting the growth rate up.
And that means, Michael Cullen said — firmly divorcing himself from Laila Harre’s Alliance — squeezing social spending generally. “We are determined to keep money back for economic transformation,” he told journalists in the pre-Budget “lockup”, even while notching up sound, “conservative” surpluses now and for the future. In the Budget speech he said: “Our capacity to lift the sustainable growth rate will not be assisted by excessive growth in expenditure which squeezes out opportunities for contributing to economic development.” read more