The Government has found $4b of savings to top up its 2023 Budget, Finance Minister Grant Robertson announced this morning.

Faced with high inflation, Robertson warned at the end of 2022 that he would only set aside $4.5b of new day-to-day spending for this Budget. If ministers wanted additional money to fund election year goodies, they would have to find it by cutting spending elsewhere.

In a pre-Budget speech to the Wellington Chamber of Commerce, Robertson announced the size of those savings was $4b.

It is four times the amount of savings found in 2019, when ministers found $1b.

“Ministers were sent a clear message that if they wanted to progress particular priorities, they needed to be looking for savings opportunities within their own agencies’ existing budgets,” Robertson said.

“The outcome of this exercise is that Budget 2023 will include $4 billion of savings and reprioritisations over the four year forecast period. For the most part, this funding has gone toward funding agencies’ existing cost pressures.

“We will detail in full what makes up this number when the Budget is released, but to be clear, these savings have been found across a wide range of areas, some of which have been well publicised already,” he said.

A large amount of this money has come from cancelling things like Covid-19 spending and axing the sweetener payments promised to councils for Three Waters.

It would mean ministers have $8.5b worth of new day-to-day spending to allocate in the Budget, making this Budget fairly large in historic terms.

Robertson said that the cost of the cyclone recovery would be funded from existing spending and borrowing, rather than raising new taxes, something Prime Minister Chris Hipkins ruled out. He said this meant some ministers missing out on funding for pet projects in order to fund the recovery.

“As the Prime Minister has already indicated the ongoing costs of the recovery will be met within the Budget operating allowance or Multi-year Capital Allowance. This means we have put responding to the cyclone ahead of some of the other areas Ministers liked to have focused on.

Robertson also warned that the slowing economy was having an effect on the Government’s economic forecasts, which will be published with the Budget next week.

“It is inevitable that this will have an impact on our key fiscal indicators. We can also expect to see tax revenue lower than previously expected as we saw in the Crown accounts released this week,” he said.

“Our position remains strong and we are resilient, but there is no avoiding global and climatic forces,” he said.

The speech also spent more time needling the opposition than previous pre-Budget speeches delivered by Robertson. In a thinly veiled reference to National and Act’s tax cut promises, Robertson said they were unaffordable.

He said that while inflation did increase the Government’s tax take, it also meant it cost the Government more to deliver services.

“Others may suggest to you that inflation means that the Government can afford to do any number of things, including tax cuts,” Robertson said.

“This might be a convenient political line to run, but it is not an economic policy appropriate to this time in New Zealand.

“Adequately funding the services that New Zealanders rely on every day is a serious challenge and one which has occupied much of our time and resources in the Budget I will deliver next week.

“Making sure we meet the needs of our people in health, education and housing is core, and it simply has to come first,” he said.

“I don’t go around telling people that spending on public services will go up, public debt will go down and taxes will be cut, all at the same time,” he said.