Govt still commited to surplus by 2014/15

The government remains committed to a return to surpluses by 2014/15 in spite of the impact Canterbury’s earthquakes have had on the deficit.

The Crown’s accounts for the year to 30 June 2011 show net expenses of $9.1  billion for the Canterbury earthquake last year made up almost half of the  Government’s $18.4 billion operating deficit before gains and losses.

“This is an unusually large deficit, but it includes the significant costs of  the Canterbury Earthquake Recovery Fund and the updated assessment of Earthquake  Commission costs,” Mr English says.

“Setting aside the earthquakes, we’ve made good progress compared to  estimates five months ago in the Budget. A combination of higher than forecast  revenue and lower than forecast spending has reduced the underlying deficit by  about $2.8 billion.

“However, this was more than overshadowed by the higher earthquake  costs.”

The deficit is concerning. But given the country was in recession before the rest of the world; that growth from about 2004 was the result of debt-fuelled spending; and that this government has faced an unprecedented series of natural and financial disasters, it could have been a lot worse.

Despite the Canterbury earthquakes, Treasury notes economic growth was better  than expected in the first half of 2011, driven by a recovery in domestic demand  and higher export prices.

“This flowed through to tax revenue, which rose for the first time in three  years due to higher income, private consumption and business profits,” Mr  English says. “And despite the earthquakes, management of public sector finances  continues to improve.

That is a significant achievement given the continuing difficulties in Canterbury which accounts for about 10% of the economy and we need more of this government’s economic medicine.

“In the current uncertain global environment, it’s important the Government  remains focused on its plan to return to surplus faster and building a  competitive economy so we can sell more to the world. This is certainly not a  time to be promising to borrow more, spend more and tax more.”

In spite of all the set backs it’s faced, National has stuck to its plan to reduce government spending and deliver on its promise of polices which promote savings, investment and export-led growth.

Normally a deficit this size so close to an election would be good news for the opposition. But when Labour squandered the good years and its Finance Minister Michael Cullen boasted about spending the lot after his last Budget few outside its core supporters, believe they should be trusted back in government.

7 Responses to Govt still commited to surplus by 2014/15

  1. Paranormal says:

    Ele, I’m committed to having a household fiscal surplus this year. However it aint going to happen unless I do positive things to make it happen. Cutting unsustainable spending is a good start. The National rhetoric sounds good but they have only tinkered around the edges of the major structural problems in our economy. There is no way NZ will be in surplus in two to three years with the current structures in place. Blinglish and Key are spending any future surplus now, as hard and fast as they can.

    National have been fortunate the opposition has been so inept, but they won’t have long after this election before the public start losing faith in rhetoric and start looking for the next big thing to save them. God help us if its a reinvigorated Liarbour offering even more tax and spend.

    Paranormal

    Like

  2. robertguyton says:

    Excuse me?

    “Economists are casting doubt on the Government’s aim of returning to surplus within three years, warning it will require deeper spending cuts or an unlikely pickup in growth.
    Announcing that the Crown accounts for the year June 30 had plunged to an $18 billion deficit in the year to June due to higher than expected earth-quake costs, Finance Minister Bill English said the Government was still committed to a return to surplus by 2014-15.
    Yesterday some of New Zealand’s leading bank economists said that because the outlook for economic growth was weaker than when English delivered the Budget in May, it looked more likely that surplus would be delayed at least a year.”

    Hamish Rutherford

    Like

  3. fredinthegrass says:

    Can you tell me who Hamish Rutherford is, Rg, please?

    Like

  4. robertguyton says:

    He wrote the lead article in today’s Business page of The Southland Times. In the article, Cameron Bagrie says, “If you look at the global back-drop, I just don’t think this economy’s going to experience 3 per cent real growth over the next 5 years.”
    There’s more and it all contradicts Mr English’s ‘happy cloud-bouncing’ claims.

    Like

  5. Scotty says:

    You may think paying back Govt dept is “squandering” but Standard and Poors dont agree with you.
    So you will be hoping Dairy farmers dont “squander” their increased payout on paying down debt.

    Like

  6. homepaddock says:

    Paying back debt isn’t squandering. I was referring to all the money Labour wasted on people in greed rather than need and policies which increased the burden of the state and decreased productivity.

    Like

  7. Scotty says:

    Care to give a couple of examples of “all the money Labour wasted on people in greed rather need “?
    No vague cliches please.

    Like

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