Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 


Research NZ Budget Observer - Still On Track For Surplus

Research NZ Budget Observer - Still On Track For Surplus as Election Looms

New Zealand's Treasury today released their pre-election budget update, ahead of the 20 September vote. The government still expects to get back to surplus in 2014/15, albeit a slightly smaller surplus than expected in May. The growth forecasts were revised down modestly for 2014/15, reflecting the recent decline in dairy prices. GDP growth is now forecast to be +3.6% in 2014/15 (previously +4.0%) and +2.6% in 2015/16 (previously +2.4%): this would still be above or around trend in both years. Lowered nominal growth forecasts also saw lower expectations for future budget surpluses. Current polling sees the incumbent centre-right National party ahead in the lead up to the election.

Facts
- The fiscal forecasts are only marginally weaker than those published in the May budget. The operating balance (excluding gains and losses) is still expected to return to surplus in the current 2014/15 fiscal year. The forecast surplus has been revised down marginally from NZD372m to NZD297m (0.1% of GDP). In 2015/16 the budget surplus was revised down from NZD1262m to NZD818m (0.3% of GDP).

- Net debt is expected to peak at 26.8% of GDP, up from 26.4% in the May budget forecasts.

- The Treasury forecasts for GDP growth over the year to March 2015 (FY2014/15) were revised down from +4.0% to +3.6%, mostly due to a sooner than expected fall in the terms of trade, driven by lower dairy and forestry prices. Forecasts for GDP growth in 2015/16 were revised up slightly to +2.6%, from +2.4%.

Implications
Today's budget update from the New Zealand Treasury reminds us that even though dairy prices have fallen sharply over the past few months, growth is still expected to remain strong. Put simply, New Zealand's current growth story is more than just milk.

Indeed, despite the recent fall in dairy prices, the Treasury's forecasts have been revised down by only -0.4ppts to +3.6% for 2014/15, leaving growth still well above trend (which we see at around +2.5%) and still suggesting that New Zealand is likely to be fastest growing OECD economy this year. Growth is expected to be supported by the Canterbury rebuild, a broader construction ramp up and strong inward migration. The Treasury's growth forecasts were nudged slightly higher for 2015/16, up to +2.6%.

Nonetheless, the -40% fall in the price of New Zealand's major export has knocked a little off the Treasury's nominal growth numbers and off their budget surplus forecasts. They expect a very small budget surplus in 2014/15 of 0.1% of GDP and have also revised down surpluses in the out-years.

At this stage, no additional tax cuts have been announced in the lead-up to the election, with the Minister of Finance, Bill English, today stating that there was 'no room for significant loosening of the purse strings'.

Current polling sees the incumbent centre-right National party, led by John Key, ahead in the lead up to the 20 September election. Three polls were conducted recently. The Fairfax Media Ipsos survey (9-13 August) has 55.1% of the vote going to the National party for an outright majority. Other polls show closer results, but would still suggest a National party win. The One News Colmar Brunton survey (9-13 August) showed the Nationals taking 50% of the vote, while the 3 News Reid Research survey (5-13 August) showed only 47.5% to Nationals, but would still suggest the Nationals are likely to scrape through once smaller parties form coalitions.


ends

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

2040 Target And Lower Standards: “Swimmable” Rivers Five Times More Likely To Make You Sick

Forest & Bird has condemned the government’s new water quality standards, warning New Zealanders that they lock in current levels of water pollution and allow for a 5-fold increase in the chance of getting sick from swimming in a river.

“Despite an explicit assurance from Minister Smith that the new water standards would provide for human and ecosystem health, he has failed to deliver on either of these things,” says Forest & Bird CEO Kevin Hague. More>>

 
 

Mayor: 750 New Social And Affordable Homes For Wellington

The next stage of Wellington’s Housing Upgrade Programme will see at least 750 new units of social and affordable housing built over the next decade, Mayor Justin Lester has announced. More>>

ALSO:

22/2: Christchurch Quake Memorial Unveiled

A city, a region, a nation and an international community impacted by the Canterbury Earthquakes will come together to mark the sixth anniversary of the deadly quake and dedicate Oi Manawa Canterbury Earthquake National Memorial. More>>

ALSO:


November Quakes:

Gordon Campbell: On The Mana-Maori Party Deal

If the self-interest involved wasn’t so blatant, the electorate deal between the Maori Party and Hone Harawira would be kind of poignant. It’s a bit like seeing the remaining members of Guns’n’Roses or the Eagles back on the road touring the nostalgia circuit… playing all the old hits of Maori unity and kaupapa Maori politics. More>>

ALSO:

Private Provision: First Social Bond To Focus On Mental Health

New Zealand’s first social bond will help around 1700 people with mental illness into work, Finance Minister Steven Joyce and Social Investment Minister Amy Adams say. More>>

ALSO:

Immigration: Short Reprieve For Nine Indian Students

A temporary hold on deportations of nine Indian students is a step in the right direction but the Government urgently needs to implement safeguards to stop further injustices to more international students, the Green Party says. More>>

EARLIER:


Megaupload Case: High Court Rules Dotcom, Co-Accused Eligible For Extradion

Internet entrepreneur Kim Dotcom and his three co-accused are eligible for extradition to the United States, New Zealand's High Court ruled... Justice Murray Gilbert upheld a decision by the District Court that there were grounds for Dotcom, Mathias Ortmann, Bram van der Kolk and Finn Batato to be extradited. More>>

ALSO:

PREVIOUSLY:

Port Hills Fire: Midday Update, Monday 20 February

• 9 homes destroyed
• 2 homes with partial damage. Damage includes things like cracked windows, heat damage.
• 3 properties with damage to other external structures e.g sheds or outbuildings More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news