Restoring solid economy will take till 2020, says English

Restoring solid economy will take till 2020, says English

By Pattrick Smellie

Dec. 14 (BusinessDesk) – It will take New Zealand another 10 years of careful economic management before it will be able to withstand shocks of the kind experienced over the last three, says Finance Minister Bill English.

“We need to get into a position where can handle another recession and another earthquake,” he told reporters at a briefing on the Treasury’s Half Year Economic and Fiscal Update. “That won’t be before 2020.”

That was partly because the government would start contributing to the so-called Cullen Fund, to partially fund future pension entitlements, from 2015, when a return to Budget cash surpluses is expected. Cullen Fund contributions were frozen as a response to the global financial crisis, on the grounds the government should not borrow to top up a savings fund.

“We are in a vulnerable fiscal position for the next six to eight years,” English said. “There will no election year spend-up. No amount of wishful thinking can make that possible.”

Also released with the HYEFU was the annual Budget Policy Statement, to give guidance on the government’s intentions for its election year Budget.

However, while the BPS stressed the government remained on track with its six areas of priority focus, it offered little hint as to how it would progress any of those areas.

On tax reform, it noted that the 2010 tax package had been implemented and that further work was required to encourage New Zealanders to save more and spend less, but gave no hint of further tax changes. On the innovation agenda, the BPS suggested greater leveraging of international trade agreements was now the focus. On infrastructure investment, it recounted schemes under way.

The only areas of possible policy upheaval signalled were those covered by two key government working groups – on savings and welfare – which are not due to report until early next year.

(BusinessDesk)

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