Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Price of recession is $50 bln, English says

$50 Billion is the price of Kiwi recession, English says

22 April - Finance Minister Bill English has put a price on the recession- $50 billion over three years - and revealed fears of a bigger jump in government debt than previously forecast by the Treasury that would require policy action to deflect.

In a Budget scene-setting speech to CEOs and senior executives in Auckland, English said the recession would hack $50 billion out of the $180 billion a year New Zealand economy over the next three years.

Vigorous reforms to improve the quality of government spending, on top of the regulatory reforms and fiscal stimulus already announced, would be a priority for the Government.

In contrast to other, recent recessions, the second-time-round Finance Minister claimed a resilient national mood during the current downturn that made him optimistic.

"Most people are doing what they need to do to get through the current challenges. That wasn't really my sense during the recessions of the 1980s and 1990s, when I remember feeling that many people were paralysed by the economic conditions."

Instead of heading above $200 billion annually, New Zealand's Gross Domestic Product will flatline at around current levels of economic activity per year, leading to a dramatic fall in tax revenue.

"With no policy change, Crown gross debt would hit 45% of GDP by 2013 - up from the main December forecast of 33%," English said, unveiling a serious deterioration in one of the crucial economic measures which his May 28 Budget will address.

"Many of you will remember the long and painful experience of paying down Crown debt in the late 1980s and early 1990s. We don't want to be in that position again."

English repeated in the speech that the Key government is "committed to retaining social entitlements", even if the next two years' tax cuts proved unaffordable.

The Budget would include a decision on the cuts, announced in the last Budget of the Labour-led government, a year ago and before the global financial markets meltdown.

While government spending could not continue to increase as fast as it had in the past, it would still rise in the year ahead and there would be "considerable new spending", said English.

English also hinted that the Budget would reveal substantial savings in government spending, after a thorough shake-out for low quality activity.

"I've actually been quite surprised by how much of this low quality spending we've found and we'll continue doing this in future Budgets," he said.

(Businesswire)

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Commerce Commission: Warns Genesis Over Business Billing Errors

The Commerce Commission has issued a warning to Genesis Energy Limited about billing errors concerning electricity line charges to business customers. Genesis reported the errors to the Commission. The Commission considers that Genesis is likely to ... More>>

QV: Tax Changes Yet To Dampen Red-Hot Housing Market

Just over a month has passed since the Government announced measures aimed at dampening the rampant growth of the property market, and yet the latest QV House Price Index data shows the market hit a new high in April. The average value increased 8.9% nationally ... More>>

Stats NZ: Consents For New Homes At All-Time High

A record 41,028 new homes have been consented in the year ended March 2021, Stats NZ said today. The previous record for the annual number of new homes consented was 40,025 in the year ended February 1974. “Within 10 years the number of new homes ... More>>

The Conversation: Why Now Would Be A Good Time For The Reserve Bank Of New Zealand To Publish Stress Test Results For Individual Banks

Set against the backdrop of an economy healing from 2020’s annus horribilis , this week’s Financial Stability Report (FSR) from the Reserve Bank (RBNZ) was cautiously reassuring: the country’s financial system is sound, though vulnerabilities remain. More>>

Reserve Bank: Concerned About New Zealand's Rising House Prices

New Zealand house prices have risen significantly in the past 12 months. This has raised concerns at the Reserve Bank of New Zealand – Te Putea Matua about the risk this poses to financial stability. Central banks responded swiftly to the global ... More>>

Westpac: Announces Strong Financial Result

Westpac New Zealand (Westpac NZ) [i] says a strong half-year financial result has been driven by better than expected economic conditions. Chief Executive David McLean said while the global COVID-19 pandemic was far from over, the financial effect on ... More>>