Finance Minister Bill English has dismissed Labour Party claims of a public backlash if health services are cut as part of a drive to further reduce public spending.
He told Morning Report the previous Govenment pumped a lot of money into the public sector, but there is little to show for it.
Mr English intends to reduce Government spending by $1.8 billion over the next four years.
More public sector jobs are expected to be lost as Government departments will have to cover any cost increases from within their existing budgets.
He says the Budget on 20 May will deliver increased funding to health and education, but some cuts will be made in those areas too.
[audio:http://www.radionz.co.nz/audio/national/mnr/2010/04/23/another_$1.8_billion_to_be_cut_from_public_sector]Listen to more on Morning Report
Focus should be on growth - Labour
Labour says the Government needs to focus less on public service cost-cutting and more on helping New Zealand's growth.
Finance spokesperson David Cunliffe told Morning Report the Government should be addressing three significant shortcomings: the external deficit, a lack of savings and the so-called brain drain.
Mr English has also firmed up indications that GST will rise. The Goods and Services Tax is currently 12.5%.