Prime Minister John Key says his Government has the trust of the public to run a "very tight ship", and it is set to continue.
In his pre-Budget speech in Wellington today, he reaffirmed the
2014/15 surplus goal and said the zero budget is "not a
straightjacket" as spending would still go to priority areas.
"We've shown over the last three years that we can run a very tight ship while retaining the trust and support of New Zealanders," he said.
"So anyone predicting a slash and burn budget is, for the fourth year in a row, sadly mistaken."
Key said the health sector would be the biggest recipient of new spending.
"We will be making some savings in health, but these savings will be reinvested back into funding more frontline services."
The same principle was applied to education, which will get a bigger chunk of funding but also make savings to reinvest back into the sector.
Key also announced an upfront investment in welfare reform.
"We are going to spend money on supporting beneficiaries into work, but we expect that this will be more than recouped over the forecast period through a lower welfare roll."
He said the Government is getting "traction" on the difficult issue of reducing long-term welfare dependency and confirmed there will be no changes to Working for Families and KiwiSaver tax credits. Both schemes had significant cutbacks in last year's Budget.
Status quo for interest-free student loans
The Government is committed to keeping student loans interest free, said Key, however he indicated the money spent on tertiary education would be "rebalanced" in this year's Budget.
"The Government remains committed to keeping student loans interest free but we are also determined to reduce the cost of the overall loan scheme to taxpayers," he said in a statement.
The Prime Minister said the expense of the student loan scheme meant the Government had to "effectively write-off" 49 cents of every dollar that was lent which National said it has already pulled down to 45 cents.
But Key wants to save even more.
"We intend to get it closer to 40 cents in the future by continuing to chase overseas borrowers and through the faster repayment of loans once people have finished their study".
He promised more details would be revealed before Budget day on May 24 and savings made in tertiary education would be reinvested back into improving teaching and research.
Key also took the opportunity to defend his Government's economic record despite a sluggish economy throughout his first term.
"It might not be the world's biggest surplus, on current
forecasts. But in 2014/15, for the first time since the global
financial crisis and the worldwide recession, the Government's
books will be back in the black," he told Business New Zealand at
the lunch event.
"That's a testament to disciplined fiscal policy and a willingness to make trade-offs."
Key said the Government's goal of surplus by 2014/15 is achievable "without any great dramas".