Strong economic and fiscal stewardship
Budget shows strong economic and fiscal stewardship
“Budget 2002 is about earning re-election, not buying it,” Finance Minister Michael Cullen says.
“It is emphatically not the traditional election year lolly scramble but instead seeks to enhance the government’s credentials as a prudent fiscal manager. We have kept net new spending within the revised $6.125 billion counting limit for the three year term and have met all the fiscal goals we set ourselves while providing for the future in a way no previous New Zealand government has.
“The New Zealand Superannuation Fund, the three year health funding package, the establishment of Industry New Zealand, the tertiary education reforms, the innovation framework, the biodiversity strategy and the ratification of the Kyoto Protocol are all examples of the government governing for the longer-term,” Dr Cullen said.
“Similarly our decision to hold our nerve and resist pressures to respond to the fallout from the 11 September terrorist attacks with a strong fiscal stimulus has been justified by subsequent events. Budget 2002 shows the economy has shrugged off the effects of 11 September and is looking forward to a stable growth rate of around 3 per cent in each of the next four years.
“On most of the other key economic indicators, the outlook is equally benign: inflation within the target range, unemployment continuing at its current low level, wages increasing by a little over 3.5 per cent a year on average, and the current account deficit – although rising – remaining below 5 per cent of GDP.
“The fiscal position moving forward is extremely positive with net worth projected to double over the forecast period while net debt less the assets in the Superannuation Fund is slashed from 16.3 per cent of GDP to 9.3 per cent.
“The OBERAC for 2001-02, at $2.3 billion, is more than double the forecast in the December Economic and Fiscal Update. This sharp improvement has allowed us to slice the Defu 2002-03 forecast borrowing programme by around one third.”
Dr Cullen said the pattern ahead was of solid and rising surpluses: $3 billion in 2003-04, $3.9 billion in 2004-05 and $4.2 billion in 2005-06. “These numbers are impressive and put the surplus track back to the levels it was at in Budget 2001. And, just as the government did not take those forecasts as an invitation to be fiscally feckless, neither will we now.
“We have built a reputation for sound fiscal and economic management. We do not intend to risk that now through silly attempts to bribe the voters with their own money,” Dr Cullen said.