Government tax cuts: 'We are still working through the exact details'

The government is "still working through the exact details" on where the money for its promised tax relief will come from, the Finance Minister says.

Nicola Willis unveiled the government's mini-Budget yesterday alongside Treasury's half year update.

She said they made $7.47billion of savings by slashing funding from initiatives like Let's Get Wellington Moving, Fair Pay Agreements and the Emissions Trading Scheme.

But the pressure is on for the government to provide detail on how it will deliver promised tax cuts as the country's economy slows.

Willis told Morning Report that while savings have already been found and public service agencies have been directed to cut costs, the government was "still working through the exact details" for the funding of tax cuts.

"We have been given good estimates by Treasury which gives us confidence that the quantum of cost means that we can meet that cost through the savings, new reprioritisations and new revenue measures that we have committed to.

"So we're confident that we can deliver tax reduction in a way that's responsible, that's fiscally neutral over the forecast period and people will see that in May [the government's Budget]."

Government agencies had been told to conduct baseline savings exercises which is expected to generate $6billion over the forecast period, Willis said.

She said the huge growth in the public service was disproportionate to what it should be.

"Individual agencies will be given targets for how much savings they should find.

"We've asked them to look, 'what ... programme do you have that is no longer delivering what it's supposed to? That's no longer aligned with coalition priorities? Or are there areas where you can have better efficiency, better productivity and therefore reduce the cost of what you're already doing?'"

The coalition government had inherited a very "difficult set of economic conditions" and tax relief was going to be very important, Willis said.

She said the government would make an announcement about interest deductibility in the new year, ahead of the Budget in May.

Government has "failed" to provide detail on tax cuts before Christmas - Labour

Meanwhile, Labour finance spokesperson Grant Robertson said there was "absolutely no detail about how [the tax cuts] were going to happen in the mini-Budget yesterday".

He told Morning Report that on the campaign trail, Willis promised details would be revealed in the government's mini-Budget.

"Nicola Willis and I spent a lot of time together on platforms during the election and she was very clear that the mini-Budget would explain how tax cuts would be paid for, and would indeed explain in some detail the public service cuts that were going to be required to do that.

"None of those things happened yesterday."

"New Zealanders had a pretty clear expectation of the government that they would tell them before Christmas what was going to happen and they failed," Robertson said.

He did not accept the government books were left in bad shape.

"The difference between the Pre-Election Fiscal Update and the Half Year Update at that level was small," he said.