The Government has forecast nearly $4 billion in savings as it plans to cut consultant and contractor spending over a four-year period.
Wasteful Government spending has been an attack line used by the Opposition often over the last term.
This afternoon, Minister of Finance Grant Robertson announced the Government will be "tightening its belt" as it "clamps down" on spending.
His announcement stated that public agencies will need to find permanent savings, including through cutting back on contractors. The savings will also come by reducing future budget allowances, trimming back some programmes, and taking back underspends.
"The Government’s published accounts for the 11 months to the end of May showed that tax revenue was more than $2 billion behind where Treasury had forecast it to be at the Budget. It should be noted that government spending was in line with forecasts during this period," Robertson said.
"Since May we have seen further deterioration in the global economy, particularly in China. This will continue to have a direct impact on the New Zealand economy, and it is important that the Government responds to meet our balanced and responsible fiscal goals.
"In the May Budget we launched a Fiscal Sustainability and Effectiveness Programme to support our return to a more sustainable fiscal position as we remove the necessary spending that supported New Zealand through the Covid pandemic."
Robertson added public agencies will be directed to cut back on spending on consultants and contractors to pre-Covid levels.
"The big policy changes that the Government had been working on – like RMA, water infrastructure and the health reforms are coming to an end.
"Along with the Covid response ending, this will take pressure off the public service, so there is room now to reduce reliance on consultants and contractors as the Government returns to focussing on delivering core public services."
Robertson said the Government wants to get contractor and consultant spending to below 11% of public service workforce spending. He claims the move will save about $165 million per year, an 18% reduction on current spend.
The forecast savings of almost $4 billion relates to an operating period which begins this year until 2027.
National's finance spokesperson Nicola Willis has previously lambasted what she called "wasteful spending" by the Government which has contributed to the cost-of-living crisis.
"We will end stagflation, solve the cost-of-living crisis and get New Zealand growing again. We will stop the wasteful spending and put the Government books back in order," Willis said.
"We will stop the despair and start the great repair."
The Ministry for Pacific Peoples was recently blasted by a watchdog commission for spending nearly $40,000 on a farewell event for its outgoing chief executive.
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