Parliament

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

Gordon Campbell: On The Todd Muller Resignation

Given the factions within National’s own caucus, anyone picked as the new leader of the National Party will struggle to unify their own troops, let alone to convince the electorate that National is a coherent government-in-waiting. Even all of that aside, no new leader – Judith Collins? Amy Adams? – seems likely to have the time or the inclination to change the party’s political messaging about Covid-19. That’s really unfortunate. In an alternative political universe, National might have been far better advised to have played the patriotism card during the pandemic, and thrown its bi-partisan support behind the government at this time of national crisis... More>>

 

Green Party: Unveils Clean Energy Plan

The Green Party is today unveiling part one of its plan for a fossil-fuel free Aotearoa, including an immediate ban on new industrial coal boilers. To ensure a just transition away from fossil-fuels, the Green Party’s Clean Energy Plan will: Establish a Clean ... More>>

ALSO:

National Departures: Press Statement From Michelle Boag

Today I am announcing that I have resigned my membership of the NZ National Party. The last few days have underscored for me the unhealthy relationship I have developed with politics. For 47 years, I have devoted much of my professional and personal ... More>>

ALSO:

Govt: Statement From Rt Hon Winston Peters

Deputy Prime Minister and New Zealand First Leader Rt Hon Winston Peters has announced he is taking a short stint of medical leave this week. More>>


Isolation: Government And Air NZ Agree To Manage Incoming Bookings

Bookings for seats on Air New Zealand flights into New Zealand will be managed in the short term to ensure the Government is able to safely place New Zealanders arriving home into a managed isolation or quarantine facility, says Housing Minister Megan ... More>>

ALSO:

Government: New Investment Creates Over 2000 Jobs To Clean Up Waterways

A package of 23 projects across the country will clean up waterways and deliver over 2000 jobs Prime Minister Jacinda Ardern and Environment Minister David Parker announced today. The $162 million dollar package will see 22 water clean-up projects ... More>>

ALSO:

Eenrgy & Environment: Snail Like Progress On Government Vehicle Emissions Targets

First published in Energy and Environment on June 2, 2020. The latest data on the Government’s attempts to reduce the emissions of its transport fleet show no discernible progress. The Ministry of Business, Innovation and Employment’s data on reducing ... More>>

Election 2020: Green Party Unveils Income Policy

The Green Party is today unveiling its Poverty Action Plan, which includes a Guaranteed Minimum Income to ensure people have enough to live with dignity. The scheme resets income support payments to ensure everyone not in full-time paid work gets at least ... More>>

ALSO:


Conservation: New Protection For Dolphins

Extensive new protections are being put in place as part of an updated plan to look after New Zealand’s native Hector’s and Māui dolphins, announced Minister of Fisheries Stuart Nash and Minister of Conservation Eugenie Sage today. More>>

ALSO:

David Seymour: ACT Leader's Address To Election Campaign Launch - ASB Waterfront Theatre, 12 July 2020

Introduction Thank you very much. Elections in New Zealand – like everywhere - are a very special tradition, because they are driven by you. They’re an opportunity to change your future. If you think about it, the Government doesn’t do much. It ... More>>

Foreign Affairs: New Zealand To Review Relationship Settings With Hong Kong

Foreign Affairs Minister Winston Peters has announced that the New Zealand Government is reviewing the settings of its relationship with Hong Kong. “China’s decision to pass a new national security law for Hong Kong has fundamentally changed the environment ... More>>

ALSO:


Covid-19 Patient Info Leak: Hamish Walker - A Personal Statement And An Apology

I have spoken to National Party Leader Todd Muller and informed him that I passed to members of the media, by email, information containing Covid-19 patient details that was given to me by a source. I did this to expose the Government’s shortcomings ... More>>

ALSO:

Economy: Infrastructure Investment To Create Jobs, Kick-Start COVID Rebuild

A new package of infrastructure investments will help kick-start the post-COVID rebuild by creating more than 20,000 jobs and unlocking more than $5 billion of projects up and down New Zealand. Finance Minister Grant Robertson and Infrastructure Minister ... More>>

ALSO:

Covid-19: Isolation System To Be Beefed Up After Stress

A range of improvements are already underway to address issues identified in the rapid review of the Managed Isolation and Quarantine system released today, Housing Minister Megan Woods said. The review was commissioned just over a week ago to identify ... More>>

ALSO:

Election 2020: Parties Get Into Gear

ACT has today announced its list for the 2020 General Election. “The calibre and experience of our candidates will impress voters of every persuasion. We have candidates from all walks of life. People who have built their homes, families and businesses ... More>>

ALSO:

 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 


 

InfoPages News Channels