Restraint on the public sector has not even started properly yet, Finance Minister Bill English told MPs today.
Appearing before Parliament’s finance and expenditure select committee, Mr English said government departments had been told before Christmas what sort of increase in their baseline budget they would get in the 2010 Budget.
That is earlier than usual: such moves are usually made early in the new year.
And most are getting a nil increase he told MPs, although “three or four are getting some extra.” He did not say which.
“Quite a few [government agencies] won’t’ get any increase the year after that either.”
The true restraint on public sector spending would not begin until the next financial year, he said – but it would not end then.
“It's as much about changing the culture as anything else,” he said. “People have become quite used to regular increases each year and just like the private sector they are having to learn that isn’t going to continue.
Turning to the wider economy, he said any recovery would be patchy and spasmodic.
“This won't be like the early 1990s where we came out of recession and pretty quickly had growth of 5-6%….we are seeing this patchiness within industries, where some are doing quite well and some are not, and also where some individual businesses are doing well within industries which are struggling.”
A global shock such as occurred in 2007-8 would “reverberate” for some years, he said.
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