New Zealand still running on a tight budget

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The Government’s surplus celebrations will be short-lived with Treasury predicting a $400 million deficit in the next financial year.

But Finance Minister Bill English says the forecast deficit shouldn’t be dwelled on with Treasury also saying the books are broadly balanced.

“The 2014/15 surplus demonstrates how things can change in such a short time, with a $572 million forecast deficit at Half-Yearly Economic and Fiscal Update (HYEFU) last December turning into a $414 million surplus by the end of the fiscal year.”

The government has been kind of lucky in a way, with world oil prices and local low interest rates keeping a lot of the pressure off.  

“This does not signal a change in direction – we will continue to focus on keeping a tight rein on spending, running surpluses and paying down debt.”

But with the books looking broadly balanced they would not cut spending any further just because a small deficit was forecast.

“We don’t intend to alter our spending plans in response.”

And despite the books looking like they’ll head into the red, the Government is loosening the purse strings – increasing their capital allowance for next year’s Budget by $1 billion.

Mr English says some of that may come from the sale of surplus crown land in Auckland, but the Government might have to borrow some money.

“We’re willing to incur a bit more debt as the Future Investment Fund has run out.”

And talk about tax cuts are now definitely off the front page.   The plan to pay for 2017 with those is still shaky.

Looking forward into the next financial year, Treasury is predicting slow economic growth in the first half of the year.

While El Niño had previously been identified as just a risk to the economy Treasury is now assuming it will have a negative impact.

Treasury secretary, Gabriel Makhlouf said the agricultural sector would likely suffer as would hydro-electric production.

 

All in all, things are quiet and stable, but there is no basis on which teachers, nurses and other public servants as well as Pharmac can start to plan on piling in on a surplus.

The belt will remain tight for now.

 

– NZN via 3 News


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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story.  And when he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

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