Govt needs to be a smaller part of the economy - English

Finance Minister Bill English has warned that public service "nice-to-haves" are likely to be cut as the Government looks to reduce spending.

In a speech to the Institute of Public Administration this morning, Mr English said the Government intended to hasten the public service reforms.

Mr English said it was apparent there was more scope for improvement in the focus and efficiency of public services.

"Something has to give, and that has to be lower-value activities the government is currently funding," he said.

"This is not a time we can afford to indulge in a whole lot of nice-to-haves, even though, for sections of the population, they feel the loss of those services or funding streams.

"The alternative is that nice-to-haves come at the expense of necessities and at the expense of fairness to people with more need."

Speaking to media later, Mr English would not specify what areas would be cut.

"An example of a nice-to-have would have been the hobby classes that were paid for through vote education. We, a couple of years ago, took away the money for that," he said.

Mr English said there were continuing discussions about where fat could be cut but indicated that the Working for Families packages for higher-income earners, and the 2025 Taskforce, an advisory group working towards closing the income gap between New Zealand and Australia, might qualify as non-essential.

Public Service Association national secretary Brenda Pilott was at Mr English's speech today and said no good news had come out of it, despite some kind words.

It was good to hear the Government acknowledge the work of the public service in the wake of the Christchurch earthquake, Ms Pilott said.

"However, that's a 'nice-to-hear' and compared to the statements today that the pace of change was going to accelerate and that there'd be an unspecified number of job cuts -- it's pretty bad news really."

Ms Pilott said the public service had already lost 2000 jobs, and it was clear there was going to be a lot more restructuring.

"What we're seeing in the United Kingdom is savage cuts to the public services, to frontline services, as they're received by citizens. I wonder whether we are not, however, getting to that point in New Zealand.

"It seems impossible to me that the public service won't soon have to cut back on services and then we'll see a public reaction, whether it's in the style of London or not I'm not sure."

Labour state services spokeswoman Ruth Dyson said she supported having a stronger public service but that the Government's plans were not the way to achieve that.

"While National continues to try and claim they are cutting backroom functions to fund frontline services, the reality is they are simply cutting services in order to cover for their failure to get the economy growing," she said.

"The reality is National have had two years to build the better public services it has been talking about but so far has failed miserably."