Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Economic momentum building as plan on track

Hon Bill English
Minister of Finance

17 December 2013

Economic momentum building as plan on track

The Government’s programme to build a faster-growing economy with more jobs and rising incomes is delivering positive results, Finance Minister Bill English says.

The Half-Year Economic and Fiscal Update, issued today, forecasts a relatively strong upturn, with economic growth reaching 3.6 per cent in 2015 and the unemployment rate falling.

“While the recovery gathers momentum, the global environment still remains uncertain,” Mr English says. “In this environment, it is important to maintain clear and credible economic and fiscal settings, as this is the best way to create new jobs, raise incomes and help families to get ahead.”

The latest forecasts show the Government posting a modest operating surplus before gains and losses of $86 million in 2014/15 – similar to the $75 million surplus forecast in Budget 2013.

Surpluses are then forecast to increase to $1.7 billion and $3.1 billion respectively in the following two years. Debt is forecast to fall, with net core Crown debt expected to peak at 26.5 per cent of GDP in 2014/15, before falling to 16.9 per cent of GDP in 2019/20.

“The Government remains committed to responsible long-term fiscal management,” Mr English says. “Improving public sector performance will assist in ongoing spending restraint beyond 2014/15, so we can pay down debt in dollar terms from 2016/17 and build a buffer against future shocks.

“We have a lot of work ahead to make the forecasts and projections a reality. The Government is this year borrowing a net $78 million on average every week and, in dollar terms, net debt will peak at $64.5 billion in 2015/16.

“It is also important to avoid the mistakes of the mid-2000s, when large increases in government spending and a booming housing market drove up interest rates and the exchange rate and eroded productivity.”

At the same time as getting its own finances in order, the Government is continuing to address New Zealand’s significant economic challenges, including a sustained rebalancing towards those sectors of the economy that compete internationally.

“A broad range of targeted microeconomic reforms currently underway, through the Business Growth Agenda, will help lift New Zealand’s productivity and competitiveness.

“Since mid-2009, the tradeables sector has grown by 11.1 per cent, after going into recession in 2005. In the same period, the non-tradeables sector has grown by 6.6 per cent.

“This is a good start, but successful rebalancing will require consistent and positive change over several years,” Mr English says.

The New Zealand economy continued to expand through 2013, growing at 2.5 per cent in the year to June – despite the severe drought which significantly restricted growth in the first half of 2013. This was among the higher annual growth rates among developed countries.

“Signs are that the pace of growth has picked up appreciably in the second half of 2013, and the Half-Year Update shows the economy expanding at 3.6 per cent over the year to March 2015, and then at an average of 2.3 per cent over the following three years.”

Mr English says New Zealand is well placed compared to most countries.

“On average, wages are increasing faster than inflation, business confidence is at its highest level since 1999 and the terms of trade remain high. There are over 53,000 more people employed now than a year ago, and the unemployment rate is dropping as the economy gathers strength.”

Budget 2014 will continue the Government’s priorities for this term: responsibly managing its own finances and returning to surplus; pushing ahead with wide-ranging microeconomic reforms to create a more productive and competitive economy; driving better results and better value for money from public services; and supporting the rebuilding of Christchurch.

“The Half-Year Update confirms the Government’s economic programme is working by laying the foundations for a stronger economy, sustainable jobs and higher incomes,” Mr English says. “New Zealand is well-placed to take advantage of the many opportunities available over the next few years and to withstand global shocks when they come our way.”

The Half-Year Economic and Fiscal Update and Budget Policy Statement are available at:

http://www.treasury.govt.nz/budget/2014/bps
http://www.treasury.govt.nz/budget/forecasts/hyefu2013

SUMMARY OF ECONOMIC AND FISCAL FORECASTS

2013 Actual2014 Forecast2015 Forecast2016 Forecast2017 Forecast2018 Forecast
Economic (March years, %)
Economic growth2.72.73.62.72.02.2
Unemployment rate6.25.85.65.45.24.7
CPI inflation0.91.42.42.42.32.2
Current account balance-4.5-4.2-5.5-6.3-6.5-6.4
Fiscal (June years)
Total Crown OBEGAL ($millions)-4,414-2,320861,6743,1045,623
Net debt (% of GDP)26.226.326.525.824.422.3

ENDS

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

 

Two Years With New Methods: Crime Stats Show Increase Led By Burglary

The two years of data show an increase in the total victimisation rate of 3.1 per cent, with 12,060 more victimisations in the 2015/16 year when compared to 2014/15 year. From this increase, 72 per cent is attributable to burglaries. More>>

ALSO:

Auckland Relocation Grants: 12 Grants Paid So Far

Since the policy took effect one month ago, 12 applicants have received the non-recoverable grant, supporting 32 people. $54,508 has been paid out, covering things like moving costs, bond, rent in advance and letting fees. More>>

ALSO:

Vaccine Funding Change: HPV Vaccines For All Children

PHARMAC has today announced changes to funded vaccines, which will benefit an extra 100,000 people... The human papillomavirus (HPV) vaccine will be available for all children and adults up to the age of 26 years, and boys will now be included in the HPV school vaccination programme. More>>

ALSO:

Gordon Campbell: On Why The Opinion Polls For Key And Trump Defy Gravity

What is going on? Donald Trump got confirmed as the Republican presidential candidate at a bizarrely chaotic political convention… and promptly received an upwards bump in the polls to where he’s now rating ahead of Hillary Clinton, for only the second time this year. More>>

Sugar: Auckland Leisure Centres Axe Unhealthy Drinks

Auckland Council is to stop selling drinks that are sweetened by sugar from vending machines at its leisure centres in a bid to try to reduce obesity and type 2 diabetes... More>>

ALSO:

Gordon Campbell: On Todd McClay’s Faulty Memory

Time and again, whenever an issue arises the initial response by government is to deny or diminish the problem – nothing to worry about here, everything’s OK, move on. Then, hang on. In line with the usual pattern, as embarrassing details emerged into daylight, the story changed. More>>

ALSO:

Labour's 'Future Of Work': Major Reform Of Careers And Apprenticeships

The next Labour Government will transform careers advice in high schools to ensure every student has a personalised career plan, Leader of the Opposition Andrew Little says. More>>

ALSO:

State Investments Management: Treasury Likes IRD, Not Education Or Corrections

The Inland Revenue Department has scored an 'A' in the first tranche of the Treasury's investor confidence rating for state agencies that manage significant Crown investments and assets, gaining greater autonomy as a result, while the Corrections and Education ministries gained a 'C' rating. More>>

ALSO:

Govt Goal: NZ To Be "Predator Free" By 2050

Prime Minister John Key has today announced the Government has adopted the goal of New Zealand becoming Predator Free by 2050... “That’s why we have adopted this goal. Our ambition is that by 2050 every single part of New Zealand will be completely free of rats, stoats and possums." More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news