Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Government holds to '15 target for wafer-thin budget surplus

NZ's 2015 wafer-thin budget surplus target now within margin of error

By Paul McBeth

Dec. 18 (BusinessDesk) - The New Zealand government is sticking to its 2015 target for getting its books back in black, but only just.

The Treasury is forecasting an operating surplus before gains and losses (obegal) of just $66 million in the 2014/15 financial year, down from the $197 million buffer flagged in the May budget, according to its half-year economic and fiscal update.

The government agency has pared back its expectations on revenue growth in the face of a softer economic recovery. If growth follows the Treasury's downside scenario, the obegal isn't expected to return to surplus until 2017.

"Continued control over spending has allowed the government to remain on track to surplus, despite the impact on revenue of more difficult global conditions," Finance Minister Bill English said in a statement. "This is a time for sensible and responsible policy - not for untried economic experiments."

The government's ambitious plan to return to surplus in the 2014/15 fiscal year hasn't convinced many, with the Reserve Bank, Fitch Ratings and a survey of financial institutions picking the books to stay in deficit for at least another year.

English told a media briefing in Wellington the government will need to consistently produce surpluses of $2 billion to $3 billion if it wants to achieve its debt repayment targets in the future.

The Treasury expects the worst to have passed, with an obegal deficit of $9.2 billion in the 2011/12 year, falling to $7.3 billion and $2 billion in the following two years before turning into surpluses.

Those forecasts rely on the government's revenue stream recovering at a faster pace than the economy on the back of personal earnings as the Canterbury rebuild fosters the labour market, a broadening of the tax take and hikes in fuel excise and road user charges.

Without the changes in transport "we would've fallen short of the surplus track," English said.

Still, those risks are skewed to the downside, with the Treasury giving it a higher than one-third chance of undershooting, and less the one-third of overshooting.

The Treasury says the reduction in tax revenue will be slightly offset by cheaper finance costs with lower inflation forecast for longer, and the Debt Management Office has increased its borrowing programme by $6.5 billion in the coming four years and included a $7 billion programme to pre-fund the 2017 bond maturity.

The DMO will issue $14 billion in bonds in the 2012/13 year, an increase of $500 million from the budget, and sell an unchanged $10 billion the following year. The office added $2 billion to the 2014/15 programme for $10 billion in issuance, and raised its 2015/16 forecast by $4 billion to $ 7 billion.

The Treasury now sees net debt topping out at $75.9 billion in 2016/17, though that's a smaller percentage of gross domestic product than in the previous two years.

Forecasts for economic growth are more downbeat than previous projections, with GDP growth expected to peak at 2.9 percent in 2013/14, before slowing to 2.4 percent by the end of the horizon. That growth will be underpinned by the Canterbury reconstruction and could be undermined if the rebuild is further delayed.

More problems in the major global economies, that have include Europe's sovereign debt crisis and the stalled negotiations to prevent the US from implementing US$600 billion of automatic tax hikes and spending cuts are also seen as a threat to the local recovery.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Science: Hookworm Discovery At Malaghan Institute

Professor Graham Le Gros has led a team which has stimulated both innate and memory responses to the parasite, discovering along the way the unexpected behaviour of one particular immune cell, in Hookworm, one of the world’s most devastating tropical ... More>>

Business: Provinces Urged To Make Full Use Of New Air Services

Provincial New Zealand has been urged to use new air services to Auckland or risk losing them either partially or completely. The stark warning was issued today by Far North mayor John Carter at a ceremony at Kaitaia airport to mark the final Air ... More>>

Mobile: 2degrees To Credit All Calls And SMS To Nepal

In the wake of the devastating earthquake in Nepal in the weekend, 2degrees will be crediting all calls and SMS messages made to mobiles and landlines in Nepal from Friday 24th April until midnight Wednesday 29th April. More>>

Scoop Business: Alex Swney Pleads Guilty To $2.5M Fraud Charge

Alex Swney, former chief executive of the Auckland city centre business association Heart of the City, has pleaded guilty to dishonestly using documents to obtain $2.5 million. More>>

ALSO:

Petrol Burns Prices: Second Consecutive Quarterly Fall For CPI

The consumers price index (CPI) fell 0.3 percent in the March 2015 quarter, following a 0.2 percent fall in the December 2014 quarter, Statistics New Zealand said today. The last time the CPI showed two consecutive quarterly falls was in the December 1998 and March 1999 quarters. More>>

ALSO:

Scoop Business: NZ Broadcasters Launch Battle Against Global Mode ISPs

New Zealand broadcasters have confirmed they’ve launched legal proceedings against internet service providers who give customers’ access to “global mode”, which allows customers access to offshore online content, claiming it breaches the local content providers’ copyright. More>>

ALSO:

Sanford: Closure Of Christchurch Mussel Processing Plant Confirmed

The decision comes after a period of consultation with the 232 staff employed at the Riccarton site, who were told on 9 April that Sanford was considering the future of mussel processing in Christchurch. Recent weather patterns had impacted on natural spat (offspring) supply... More>>

ALSO:

Price Of Cheese: Dairy Product Prices Fall To The Lowest This Year

Dairy product prices fell in the latest GlobalDairyTrade auction, hitting the lowest level in the 2015 auctions so far, as prices for milk powder and butter slid amid concern about the outlook for commodities. More>>

ALSO:

Houston, We Have An Air Route: Air New Zealand To Fly Direct To The Heart Of Texas

Air New Zealand will fly its completely refitted Boeing 777-200 aircraft between Auckland and Houston up to five times a week opening up the state of Texas as well as popular nearby tourist states such as Louisiana and Florida. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news