Parliament

Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 

Government focused on surplus in 2014/15

Hon Bill English

Minister of Finance


16 December 2014

Media Statement
Government focused on surplus in 2014/15

The Government believes an OBEGAL surplus is achievable this financial year, despite Treasury’s latest forecast today predicting a $572 million deficit (0.2 per cent of GDP) for the year to 30 June 2015, Finance Minister Bill English says.

“These forecasts emphasise the unusual conditions the New Zealand economy is experiencing,” Mr English says. “Treasury is predicting solid growth, growing employment and low interest rates, which help New Zealanders to get ahead. But at the same time, falling dairy prices and low inflation are restricting growth in the nominal economy and government revenue.

“This is making it more challenging for the Government to achieve surplus in 2014/15. However we remain on track to reduce debt to 20 per cent of GDP by 2020.

“Although this latest Treasury forecast predicts a small deficit for the current year, we believe the strong underlying economy and responsible fiscal management can deliver a surplus when the final government accounts are published next October,” Mr English says.

Previous forecasting rounds show the outlook can change significantly between the Half Year Update and the final accounts being published. As recently as 2012/13, the final OBEGAL deficit was $2.9 billion smaller than the previous HYEFU forecast.

“The Government has a track record of sticking to our spending plans to protect the most vulnerable and to provide certainty for users of public services. We won’t be changing that approach,” Mr English says.

“Despite the lower than expected revenue forecasts, the Government’s ongoing commitment to spending restraint means the public finances continue to improve significantly each year.”

The OBEGAL deficit has shrunk significantly from a peak of 9 per cent of GDP in 2010/11. Net core Crown debt is expected to peak in the current fiscal year at 26.5 per cent of GDP and then reduce to 19.1 per cent of GDP in 2020/21. A residual cash surplus is now expected in 2017/18, a year earlier than forecast previously, which is also when the Government intends to start repaying debt in dollar terms.

The Budget Policy Statement released today confirms that allowances for Budget 2015 and Budget 2016 have each been reduced to $1 billion. The allowance has been re-phased over three years to provide a $2.5 billion allowance in Budget 2017.

“This will allow us to consider modest tax cuts and/or additional debt repayment in Budget 2017, as economic and fiscal conditions allow,” Mr English says.

Treasury’s forecasts suggest that New Zealand’s economic growth potential before inflation sets in - essentially the speed limit of the economy - is higher than estimated previously.

New Zealand recorded 3.9 per cent economic growth over the year to June, which was one of the higher rates among developed countries. Other positive economic indicators include:

• GDP growth is expected to average almost 3 per cent over the next five years, better than the Euro area, the US, the UK, Japan and Canada.

• Interest rates are staying lower for longer, with mortgage interest rates still just above 50-year lows.

• Household disposable income is increasing faster than inflation – rising 9 per cent in real terms in the last four years. It is forecast to increase by another 9 per cent over the next four years.

• Recent job growth is expected to continue. There are 72,000 more people employed now than there were a year ago. An additional 153,000 people are forecast to be in work by mid-2019.

• The average full-time wage is expected to rise by $8,000 to around $64,000 by mid-2019.

• Unemployment, currently at 5.4 per cent, is forecast to fall to 4.5 per cent by 2018.

“Achieving those goals is possible only with a continuation of the sustained economic growth this Government’s careful economic management is helping to deliver,” Mr English says.

The Half Year Economic and Fiscal Update and Budget Policy Statement are available at:http://www.treasury.govt.nz/budget/2015/bps

http://www.treasury.govt.nz/budget/forecasts/hyefu2014

SUMMARY OF ECONOMIC AND FISCAL FORECASTS

2014
Actual
2015
Forecast
2016 Forecast2017
Forecast
2018
Forecast
2019
Forecast
Economic (March years, %)
Economic growth3.23.53.42.82.32.2
Unemployment rate6.05.45.14.74.54.5
CPI inflation1.51.32.02.12.02.0
Current account balance-2.7-5.3-6.2-5.8-5.7-5.9
Fiscal (June years)
Total Crown OBEGAL ($millions)-2,933-5725652,6023,0744,101
Net debt (% of GDP)25.626.526.525.224.022.5

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines


Scoop Covid-19 Coverage: Auckland To Remain At Level 3 Restrictions, Rest Of NZ At 2 For 12 More Days


Auckland will remain at level three restrictions and the rest of the country at level two for 12 more days Prime Minister Jacinda Ardern announced.
She said this would be reviewed on August 21, but there was no indication yet anywhere was required to go to level four restrictions.
Ardern said a good start had been made in stamping out the infections associated with the Auckland family cluster and it appeared it had been picked up early. There was still no certainty about where the virus had come from, but it appeared to be new to New Zealand and not a sign the virus was dormant.... More>>

 

Government: Plan To Tackle Problem Plastics

Following the success of the phase out of single-use plastic shopping bags, the Government now has plans to phase out more single-use and problem plastics to reduce waste and protect the environment announced Associate Minister for the Environment ... More>>

ALSO:

Gordon Campbell: On The New Lockdowns, Leadership And Lebanon

As Melbourne has shown, the webs of urban life overlap so extensively that community transmission can be very hard to trace, let alone control. Each of the family members in the South Auckland family at the centre of the current outbreak will have had ... More>>


ALSO:

National: Emma Mellow As Auckland Central Candidate

Tonight the National Party has selected Emma Mellow to stand in the Auckland Central electorate for the 2020 General Election. Emma Mellow replaces retiring MP Nikki Kaye who first won the seat from Labour in 2008. Emma leads a team of communications ... More>>

ALSO:

Travel: Update On New Zealand And The Cook Islands Bubble

The Prime Minister of New Zealand Jacinda Ardern and the Prime Minister of the Cook Islands Henry Puna have welcomed the completion of phase one in the establishment of a travel bubble between New Zealand and the Cook Island. More>>

Election 2020: Labour Launch

E ngā mana e ngā reo Ngāti whātua ngā mana whenua o Tāmaki Makaurau, e tika te kōrero Ehara taku toa he toa (taki tahi) he toa (taki tini) No rēira tātou e huihui mai nei, ka ‘Hoake tonu tātou’ Thank you for that welcome. And thank ... More>>

Gordon Campbell: On Political Twins, And On Labour Extending Its Wage Subsidy Scheme

A quick quiz for the weekend. Which political party currently represented in Parliament issued a press release yesterday that contained these stirring passages: “[We have] long supported a free trade and free movement area between Canada, Australia, New ... More>>

ALSO:

Democracy 2.0: NextElection Partners With Scoop For Exciting Democracy Tech

Joint Press Release: NextElection, Scoop.co.nz, ScoopCitizen NextElection , a technology platform empowering democracy and Government accountability, and Scoop Independent News have partnered to strengthen citizen participation in the 2020 New Zealand General ... More>>

ALSO:


Covid-19: Poll On Management Approval

New Zealanders’ overall trust in the Ministry of Health and Government to manage the COVID-19 pandemic is at 82%, down from 91% during April. Overall distrust that the Ministry and Government will manage it in ways which best protect themselves More>>

Election 2020: National Releases 2020 Party List

National’s 2020 Party List is a strong mix of experience coming up through our Caucus, and new and exciting talent joining our team from communities across New Zealand, Party President Peter Goodfellow says. “The National Party is incredibly ... More>>

Horizon Research Limited: How Judith Collins Stopped The Bleeding

Horizon Research includes questions on voting from time to time in its surveys – for both forthcoming referenda and general elections. More>>

Your Vote 2020: Bringing Election Coverage To Viewers Across TVNZ Channels And Platforms

As New Zealand gets ready to head to the ballot box this September, 1 NEWS is bringing voters comprehensive coverage and analysis of this year’s General Election. TVNZ’s coverage will draw on the depth of experience held across the 1 NEWS team, says Graeme ... More>>

Economy: 30% Believe Households Worse Off, 298,000 Expect To Lose Jobs

64% of New Zealanders feel the economic position of their households is the same or better than a year ago – and 30% think it is worse or much worse, while 298,000 think they will lose their jobs in the next 12 months. Households’ perceptions ... More>>

State Services Commission: Findings Of Investigation Into COVID-19 Active Cases Privacy Breach

Deputy State Services Commissioner Helene Quilter has today announced the findings of an investigation into a breach of privacy regarding sensitive personal information. The investigation looked into who or what caused the disclosure of the information, ... More>>

International Security: New Zealand Suspends Extradition Treaty With Hong Kong

The New Zealand Government has suspended its extradition treaty with Hong Kong and made a number of other changes in light of China’s decision to pass a national security law for Hong Kong, Foreign Affairs Minister Winston Peters says. More>>

ALSO:


 
 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 


 

InfoPages News Channels