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New Zealand: Government Tightens Budget Even More |
| Source: |
stuff.co.nz |
| Source Date: |
Thursday, April 26, 2012 |
| Focus: |
ICT for MDGs
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| Country: |
New Zealand |
| Created: |
May 08, 2012 |
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Finance Minister Bill English has further tightened the screws on the Government's finances, signalling cuts to future new spending provisions to help bring the budget back into surplus.
That comes on top of the previously-announced plan to dump the $800m earmarked for new spending this year in favour of a near-zero Budget.
He warned that preliminary Budget estimates in recent weeks had revealed a $1-billion worsening of the forecasts for 2014/15.
Without further measures, that would have seen a deficit of $640m in 2014/15 instead of the $370m surplus forecast in the Budget Policy Statement, English told the Wellington Chamber of Commerce today in a pre-Budget scene-setter.
But the Budget would set out balanced decisions to ensure the Government remained on track to surplus in 2014/15.
"It's important that we return to surplus because New Zealand is one of the most indebted countries in the world as measured by our net international investment position," he said.
"We need to start rebuilding a buffer for when the next global crisis comes along. Surpluses give us choices we simply don't have while we're running deficits."
Ministers were also looking at the appropriate level of future operating allowances, he said.
Returning to surplus by 2014/15 would be a significant challenge, requiring tight control over spending for the foreseeable future, Mr English said.
The deteriorating forecasts reflected a number of factors, such as the impact of lower global growth on this country's short-term growth forecasts. "This in turn flowed into lower government revenue expectations."
Also, the "Cullen" Superannuation Fund's revenue and State Owned Enterprises profits had been revised downwards, and finance costs and earthquake costs were revised upwards.
Ministers were taking steps to ensure a return to surplus, including:
Running very close to a zero Budget, meaning little new net government spending in this Budget out to 2014/15.
Continuing to reprioritise existing spending into higher priority areas to ensure better public services.
Considering the appropriate level of future operating allowances, while ensuring better service delivery.
Continuing with revenue-enhancing measures signalled in Budget 2011 such as fairer tax treatment of employee benefits, new rules for mixed-use assets such as holiday homes, and a new approach for livestock valuation.
Proceeding with $1 billion of public sector savings over the next three years, as announced in Budget 2011 to ensure chief executives had time to plan. Those savings begin on July 1.
The Budget will also propose changes in the Public Finance Act so there are more checks and balances on ministers' spending decisions and their long-term effects.
This includes a proposed spending limit to restrict spending increases to population growth and inflation, as set out in the support agreement with ACT, English said.
The limit wiould exclude spending outside the Government's control, or which would help stabilise the economy in a downturn, such as spending on natural disasters, finance costs, unemployment benefits and asset impairments,
He said the Government would maintain a balanced approach by "keeping up entitlements to welfare and superannuation, and continuing with large programmes like Working for Families and interest-free student loans".
It would also spend more on health and education.
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New Zealand: Government Tightens Budget Even More Finance Minister Bill English has further tightened the screws on the Government's finances signalling cuts to future new spending provisions to help bring the budget back into surplus
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