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Cutting Mfat: Winston Peters cancels planned cuts, saving ministry $20 million a year

NZ First leader Winston Peters has saved Mfat from cuts. Photo / Mark Mitchell

Foreign Secretary Winston Peters has saved Mfat from a round of painful cuts, reducing part of his budget by just 1 per cent, a fraction of the size of the cut planned by Labor and promised by National.

As Labor cuts were already planned, the Foreign Office and Trade budget will actually be $20 million better than expected before the election.

Peters said the Government had found “$15 million in savings per year in Vote Foreign Affairs through administrative efficiencies and lower priority activities to play our part in turning around the country’s fiscal position, for a total of $60 million.” dollars during the forecast period.”

Before the election, the then Labor Government had announced a self-saving exercise, cutting non-frontline services by 2 per cent a year or $506 million a year across the Government from the 2024/25 financial year. . Those cuts were underway before the election. They have been absorbed by the new Government as part of its campaign to save $1.5 billion a year.

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Mfat was willing to contribute $35.1 million to that savings exercise from the next budget, 2024/25. Peters’ office confirmed that those cuts have been scrapped and replaced with new, smaller cuts from Peters, saving the agency $20 million.

Mfat was also in line with a 6.5 per cent cut under National’s Back Pocket Boost election policy, cuts that would have been additional to Labour’s plan.

Those cuts were in addition to Labour’s cuts, but used a slightly different basis. The policy would have cut 6.5 percent of $556 million in department spending, equal to an additional $36 million cut, or $70 million total. In view of this, Mfat has saved $55 million.

“Given the legacy of exploding debt and budget deficits on the government’s books under our predecessors, we have found $15 million in savings per year at Vote Foreign Affairs from administrative efficiencies and lower priority activities to play our role in turning the fiscal situation of the country. position, totaling $60 million over the forecast period,” Peters said.

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Peters said Mfat was also getting some new money, negating the effect of his modest cut.

“$60 million in operational and capital investment for the necessary renewal of New Zealand’s diplomatic outpost infrastructure in the Pacific.”

He called the budget “balanced.”

“The balance achieved in this year’s budget is between risk and opportunity and between administrative savings and top-line investments. Its emphasis on fiscal savings and risks is entirely appropriate as we review the ministry’s overall operations, including our overseas diplomatic network in the coming months to better align it with the Coalition Government’s foreign policy priorities and opportunities to seriously improve our export performance over the next decade. ,” he said.

Peters said the Government would seek to reverse the crisis in the Scott Base redevelopment project, which had gone seriously over budget. The most recent cost estimate was just under $500 million, roughly double the originally agreed upon cost estimate.

“Under the board’s new leadership, we are also reversing the serious fiscal risks we inherited in the stalled Scott Base redevelopment project, reducing taxpayer liability for what remains an important project of national interest.”

Thomas Coughlan is deputy political editor, covering politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.

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