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

Gordon Campbell:
On Andrew Little’s Debut, Mockingjay, And Drunk Texting

John Key’s credibility has taken a hammering this week – at least among the 50% of the electorate who have always had doubts about him on that score.

The other substantial story of the week has been about Andrew Little’s debut as Labour leader, which has received top marks, especially among the 25% of the electorate still voting Labour. According to some reports, the Labour caucus has been ‘in seventh heaven’ about Little’s success this week in taking it to the government in the House. More>>

ALSO:

 
 

Parliament Today:

Gordon Campbell: On Government Arrogance

Right now, National is ramming anti-terrorism measures through Parliament. This legislation will grant the SIS the power to carry out 48 hour bouts of surveillance on anyone without a warrant, and will bestow on government the power to unilaterally revoke anyone’s passports and thus deny them the freedom to travel. More>>

ALSO:

Glenn Inquiry: Report Offers Solutions To Family Violence

The People’s Blueprint unveiled today by Sir Owen Glenn’s independent inquiry into child abuse and domestic violence outlines a new, more cohesive and effective system for reducing New Zealand’s alarmingly high family violence rates. More>>

ALSO:

Environment Commissioner: Changing Climate And Rising Seas - Understanding The Science

A rising sea will be with us for a long time to come – one way or another we will have to adapt. But how high and how fast the water rises will be influenced by the speed at which the world – including New Zealand – reduces greenhouse gas emissions over the coming decades. More>>

ALSO:

Key Texts With Whale Oil Released: PM Can’t Be Trusted Over Dirty Politics Defence - Greens

John Key’s answers to questions about dirty politics can’t be trusted, after he was forced to admit that he had misled journalists and Parliament about contact with attack blogger Cameron Slater, said the Green Party today.. More>>

ALSO:

Temporary Release Crackdown Continues: Corrections Review Of Phillip Smith Case

“The review by Corrections’ Chief Custodial Officer reveals that the plan for Smith’s series of temporary releases was overly ambitious and misinformed. He’s a highly manipulative and deceptive person who although technically eligible, should not have been considered for temporary release." More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news