Budget Policy Statement Must Signal Restraint
10 December 2009
Budget Policy Statement Must Signal Fiscal Restraint
The Wellington Regional Chamber of Commerce has endorsed the Reserve Bank’s message that more restraint in government expenditure is needed and hopes to see this in next week’s Budget Policy Statement.
“Sustained low interest rates are crucial for business recovery in this economic environment. To avoid an early rise in interest rates, the government must contain its expenditure,” said Chamber CEO Charles Finny.
“This message was confirmed by Reserve Bank Governor Alan Bollard in his statement this morning - ‘As growth becomes self sustaining, fiscal consolidation would help reduce the work that monetary policy might otherwise need to do’.
“This is a message we have been saying for some time. The more expansionary, the government’s fiscal policy, the greater the upward pressure there will be on interest rates.
“We hope that in next week’s Budget Policy Statement, the Minister of Finance signals an end to the current fiscal stimulus, and outlines a path of declining government expenditure and tax revenue,” Mr Finny concluded.