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

 


Responsible spending will restrict rate rises

Responsible spending will restrict rate rises


The Government has confirmed it will stick to its $1 billion new operating allowance in Budget 2014 and the allowance will increase to $1.5 billion in Budget 2015, Finance Minister Bill English says.

The allowance will then increase by 2 per cent each Budget.

“These modest increases in spending meet the Government’s objective of reducing net debt to 20 per cent of GDP by 2020, and will not materially affect interest rates,” Mr English says.

The operating allowance is the amount set aside in each Budget for new policy initiatives - either spending or revenue.

“Treasury advice I’m issuing today confirms that lifting annual Budget allowances to $1.5 billion a year is around the upper limit before they begin to materially affect interest rates,” Mr English says.

“It’s important that we do not return to the big spending increases of the mid-2000s which, together with a doubling of house prices, forced the Reserve Bank to push up interest rates at a significant cost to households and businesses.

“This confirms the Government’s commitment to ongoing spending restraint to meet our fiscal objectives and to keep pressure off interest rates.
“It will also provide the Government with more options around targeting extra investment in quality public services and to consider modest tax reductions in future years.

“There will be room to move some of the allowances between Budgets, providing they average around $1.5 billion and economic conditions permit.”
Treasury forecasts show the Government’s books continuing to improve as the economy grows and the Government maintains its careful and responsible management of public services and government spending.

Budget 2014 forecasts the operating balance before gains and losses will be in surplus by $372 million next year – a sharp improvement on the $18.4 billion deficit in 2010/11 and the $3.9 billion deficit the Government inherited in 2008/09.
Net core Crown debt is forecast to peak on an annual basis at 26.4 per cent of GDP in 2014/15, and decline thereafter. Longer-term projections show net debt dropping to 20 per cent of GDP in 2019/20 - meeting the Government’s debt objective.

“Spending restraint and a growing economy have led to a remarkable turnaround in the books,” Mr English says. “At the same time, the Government has achieved much better results from public services.”

Net of reprioritisation, the cost of the Government’s new spending and revenue initiatives over the past six Budgets have totalled less than $2.7 billion in the final year of the forecast period. By comparison, the last six Budgets of the previous Government totalled $20 billion.

Core Crown expenses have fallen from around 34.4 per cent of GDP in 2008/09 to a forecast 30.3 per cent of GDP in the 2014/15 financial year. They are then expected to go under 30 per cent of GDP and stay below that level.

“Future surpluses will allow the Government to pay for capital spending and begin reducing debt built up during the years of budget deficits,” Mr English says.

“Paying down debt is our priority, as the Crown’s net debt has risen by around $50 billion since 2008.”

The Government’s capital requirements in the next two Budgets will continue to be met by reprioritisation of the government’s balance sheet, in particular drawing on proceeds from the share offer programme through the Future Investment Fund.

After net debt has gone below 20 per cent of GDP, the Government intends to manage this debt within a range of 10 to 20 per cent of GDP over the economic cycle.

It will also restart contributions to the New Zealand Superannuation Fund - projected to resume in 2019/20 when net debt reaches 20 per cent of GDP.

Treasury’s report “The macroeconomic effects of a change in the fiscal impulse” is available at:
http://www.treasury.govt.nz/publications/informationreleases/budget/2014

ends

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

#SaveCampbellLive : Mediaworks Delivered 104,000 Petition Signatures At TV3's Newton HQ
#PonyTailGate #TailGate Full Coverage

Pukeahu Park : ANZAC 100th Anniversary Dawn Service In Pictures

Roughly 18,000 people gathered this morning at Pukeahu Memorial Park for the Anzac day centenary. Anticipating the large turnout, patrons arrived as early as 4.30. It was virtually impossible to get near the Memorial after 5am. By 6, the crowds on Taranaki Street had stretched as far back as the Z Petrol station.

The screens erected around the park displayed the live events to those who had turned up. The heat generated by the huge number of people caused many to take a turn. Medics and ambulances were on hand for the fainting crowd members. Only twenty minutes into the ceremony, one medic said they had already dealt with 15 to 20 spells. More>>

 

PARLIAMENT TODAY:

War: What’s To Commemorate?

Gordon Campbell in Werewolf: Is there anything that can be validly commemorated on this 100th anniversary of Gallipoli? Beyond, that is, a fleeting sense of empathy with the thousands of soldiers killed or wounded on April 25 1915 and in the months thereafter, until the whole thing was finally called off in December 1915. More>>

MORE IN WEREWOLF:

ALSO:

Peter Ellis Case: Minister Declines Request For Commission Of Inquiry

Justice Minister Amy Adams has declined a request from supporters of Peter Ellis for a Commission of Inquiry on the basis that an inquiry cannot be used to determine the liability of any person. More>>

Quakes: New Process For Red Zone Crown Offers

Canterbury Earthquake Recovery Minister Gerry Brownlee has announced a process to give everyone a say on the Crown offers to owners of vacant, commercial/industrial and uninsured properties in the Residential Red Zone. More>>

ALSO:

Gordon Campbell: On The Battle Obama Is Waging Over The TPP

For the past two and a half years, this column has been arguing that the fate of the Trans Pacific Partnership (TPP) deal will hinge on whether US President Barack Obama can win Trade Promotion Authority (TPA) from Congress... Last week, the White House finally, finally unveiled a draft TPA Bill. More>>

ALSO:

Greens: Govt Breaks Free Doctors Visit Promise To Kids

Documents obtained by the Green Party show that the Government decided to fund only 90 percent of doctors’ visits for children suffering from an injury in an attempt trim the cost of the so-called “free” visits. More>>

ALSO:

Other Wars: Extension Of NZDF Commitment In Afghanistan

The New Zealand Defence Force’s commitment of mentors and support staff to the Afghan National Army Officer Academy in Afghanistan has been extended out to December 2016, Defence Minister Gerry Brownlee says. More>>

PM's Press Conference: Auckland Property Prices Increasing "Too Rapidly"

John Key accepted that Auckland property prices 'are going up too rapidly” in a press conference held today in Wellington, however he said that this is not anything new. More>>

ALSO:

Press Conference: ANZAC PMs Concerned About ISIL Bringing The War Home

Prime Minister Key and Prime Minister Abbott spoke of the bond formed between Australia and New Zealand in the “baptism of fire” of Gallipoli. Abbott stated that New Zealand and Australia’s values and interests are linked, and this is reflected in the joint operation in Iraq which will begin shortly. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news