The government has freed up $700 million in the Budget after ministers reviewed all programmes and initiatives, Finance Minister Grant Robertson says.
Mr Robertson delivered a pre-Budget speech in Auckland this morning and said there would be a surplus in the 17 May Budget, and in following years.
Along with the $700m savings, he said plans to crack down on tax dodgers and new property taxes had freed up $1.4 billion of new money over four years.
"We will deliver a sustainable operating surplus across an economic cycle," Mr Robertson said.
"We will not generate artificial surpluses by underfunding essential areas such as health, education, and infrastructure."
He said the Budget would rebuild "neglected" public services.
However, he also warned Labour would not be able to achieve all it wanted in one Budget, and said 2018 would be about "laying the foundations."
"We cannot make up for nine years of neglect in one Budget ... our commitments are for three years of government and beyond."
"This means some things will be phased or will not start until next year but the commitments of our coalition and confidence and supply agreements, and speech from the throne, stand."
One pledge that would not be fully implemented would be Labour's promise to fully implement a $10 price reduction for GPs visit from 1 July, with Health Minister David Clark blaming the National Party for larger than expected DHB deficits.
The National Party said Labour over-promised during the election and was now struggling to deliver.
Mr Robertson said this Budget would clearly show the different priorities of the new government.
"It is only natural that some of the previous government's policies and schemes do not fit with our plans, have not stacked up as value for money, or have simply not come to fruition."
He did not give any details about which policies or programmes had been scrapped as part of the review.
The government would also reduce debt more slowly than the National government had planned, and scrap the tax cut programme, to allow for its policies like KiwiBuild, fees free tertiary, the Provincial Growth Fund and the Families Package.
There would be more work done in the next phase of the review, said Mr Robertson.
"I will work with Ministers to take a further look into their allocations to ensure we are getting the best value for money from the investments the government makes on behalf of all New Zealanders."
He also flagged investments in the Budget to help New Zealand "make the shift" to a low-carbon economy.
"This will include seizing the opportunity for new, clean technologies through the Green Investment Fund, agreed as part of our Confidence and Supply agreement with the Green Party."