Period Of Fiscal And Policy Consolidation
19 December 2000 Media Statement
Govt Enters Period Of Fiscal And Policy Consolidation
"The Budget Policy Statement 2001 shows strong resilience in the Government's fiscal position," Finance Minister Michael Cullen said today.
"The aggregate fiscal numbers are little changed from budget night, and the Government is on target to meet its fiscal objectives and to finance the proposed New Zealand Superannuation Fund.
"The Government has had a busy first 12 months in office. Initiatives include: restoring the base rate for New Zealand Superannuation, reintroducing income-related state house rentals, reducing the interest burden on student loans, cutting waiting times for elective surgery, developing a three-year industry and regional assistance strategy, launching a biodiversity package and substantially increasing funding for mental health and for culture and the arts.
"We decided in Budget 2000 to "front-end load" our new spending programme because we inherited problems which needed urgent redress.
"We are now entering a period of consolidation and implementation. Because we are committed to remaining within the $5.9 billion fiscal cap established in Budget 2000, the spending allocations in our next two budgets will be tight at around $600 million and $575 million respectively.
"The Government signalled in Budget 2000 an intention to raise the capital provision. The BPS raises this from $2.4 billion to $3.2 billion over three years. This will help meet the increase in Defence Force acquisition costs arising out of the fall in the New Zealand dollar against the United States dollar.
"It will also help finance hospital loans. Because Crown finance costs are generally lower than those available in the private sector, it makes sense for public hospitals to go to the Crown for their borrowing needs.
"The BPS signals a pattern of rising surpluses and cements the Government's reputation as a prudent and conservative fiscal manager," Dr Cullen said.