More cuts for public sector

The public sector's already snug belt will be further tightened this year as Prime Minister John Key pledges further job cuts and mergers.

In his statement to Parliament presented today, Mr Key said he had asked for advice on further changes to streamline and improve the performance of government departments.

"The year, and in the years that follow, you should expect to see more back-office savings initiatives, further restraint in terms of core government administration positions, and more consolidation of agencies and functions," he said.

Front-line services were a government priority and he wanted to free up money for the services by reducing back-office and administrative costs.

"We want to see better results for the public services we fund and we are driving significant reforms to achieve that," he said.

"Since coming into office we have reduced the number of full-time equivalent staff positions in the core government administration by 5 percent," he said.

"The Government is building better outcomes from public services by being clear about New Zealanders' priorities, by minimising waste, scaling up what works, getting rid of what doesn't, and generally focusing our investment on changes that bring results."

Finance Minister Bill English is expected to give more details on the Government's plan in a few weeks, he said.

Building better results from the public services is one of two key government goals for 2011, Mr Key said. The second is to build the foundations for a stronger economy.

"We are rebalancing the economy away from debt-fuelled consumption and government spending and towards savings, investment and exports."

Mr Key reiterated that the Government plans to cut spending to around $800 million-$900 million in the May budget, compared to the average of $2.8 billion per year, and planned to partially sell state-owned assets.

"The Government cannot keep building up debt forever so we need to look at where we can change the mix of assets we own," he said.

"This year we will consider advice on extending a model of mixed private-public ownership to a select group of commercial assets currently owned solely by the Government."

Mr Key said the Government was also considering the Savings Working Group recommendations, which urged improvements to KiwiSaver, and tax changes to help New Zealanders save.

Other Government priorities for 2011 include expanding exports; increasing job skills; building more infrastructure; rebuilding Christchurch; cutting red tape for businesses; focusing on vulnerable children and revamping the welfare system.