By Bernard Hickey
Finance Minister Bill English has announced the May 16 Budget for 2013/14 will confirm the government is on track to hit its target of a budget surplus by 2014/15.
He also signalled plans for continued tough budgets after 2014/15 by confirming the government's plans for rapid debt reduction from 30% of GDP in 2017 to 20% of GDP by 2020.
"I can confirm that it (the May 16 Budget) will show the Government remains on track to surplus in 2014/15, as a result of our careful management of the accounts," English said in a speech to the Wellington Employers’ Chamber of Commerce.
“That is a considerable achievement – and a significant turnaround in the space of just a few years. Just two years ago, we ran an NZ$18.4 billion deficit, half of which was the cost of contributing to the rebuild of Canterbury," English said, adding however that returning to surplus was just the first part of the government's plan.
“We will still have some way to go in rebuilding the fiscal buffers that have been run down in recent years. That means fiscal responsibility will be permanent,” English said, adding the government's second objective was to bring down the government's net debt to 20% of GDP by 2020.
“In the Half-Year Update in December, net government debt was forecast to be almost 30 per cent of GDP in 2017. So you can see there is quite a challenge in front of us to meet the 20 per cent debt target by 2020,” English said.
The Reserve Bank pointed in its March Monetary Policy Statement to the government's plans to tighten fiscal policy as a factor "dampening momentum" in the economy. It said the tightening was equivalent to 3.2% of GDP over the next four years.
“It means we will need to maintain firm expenditure control beyond our return to surplus, so we can run big enough surpluses to have choices about paying down debt and investing more in priority public services," he said.
“It is also a critical element of building a more internationally competitive economy. By reducing the resources the Government absorbs, we are making room for private investment while minimising upwards pressure on interest rates and the exchange rate. Budget 2013 will reflect those realities," he siad.
“Conventional monetary policy, predictable fiscal policy and a sound financial system are precious advantages in an unstable world. We will hold on to them.”
23 Comments
“Conventional monetary policy, predictable fiscal policy and a sound financial system are precious advantages in an unstable world. We will hold on to them.”
What the hell does that even mean....? is it just something a guy says...? is it an endorsement of RBNZ hamstrung policy through infantile understanding of Macroeconomics.......what the hell does that even mean.
Here's a tip Billy Bob, don't plan anything beyond the next election....... unless it's a coup.
This is the Editor's Choice? A comment in which a reader of a finance website indicates, apparently with pride, that he does not understand a clear, simply structured and grammatically correct sentence containing common economic terms?
Christov, you may not agree that the world is unstable; you may not agree that conventional monetary policy, predictable fiscal policy and a sound financial system are advantageous; you may not agree that New Zealand has any or all of them; you may not agree that the Government is right to seek to hold on to them. These are matters of opinion, and you are entitled to disagree with any aspect of the statement quoted.
But to say that you simply do not understand the statement adds nothing to debate and frankly reflects worse on you than it does on the author of the statement.
Cheers Ms de M...I appreciate your candour, I was however citing Dr. Bollards own words when quoting the infantile understanding of macroeconomics....so I feel Ok about that.
In terms of my awareness of Global instability, I can only offer my historical posts, and financial scars to prove it.
As to the statement in question I think I said " what the hell does that even mean " given Dr. Bollards comments on ...our...understanding of complex Global financial affairs.
Now yes I'm a bit dyslexic...hence the spelling from time to time, and know fully I'm not up to speed on all things financial.......but then , it appears as ....we hold on to them...neither are we.
I take no offence...as I think none was intended.....save being a bit too literal
Sorry KH...my point was I guess unless your Grandchilden are of recent immigrant descent, I find it difficult to believe they'll have much call for celebration.........you do realise enticing shiploads of Foreign Capital while they are desperate to find a home for it isnt Rocket Science...don't you .
Obviously you don't lament the departure of a serious percentage of New Zealanders to where they feel they can compete for housing and so forth.
As the accounts continue toward surplus targets, don't kid yourself it won't be at the expense of NZ'ers as we knew them........
Good for him shouting it from the rooftops, but give it a break , he did squat, Bollard did squat.. Wheeler...will do squat...if it wasn't for the Foreign Capital...Asset sale...Christchurch Insurance fraud rebuild....he'd have squat to show.
Thanks Christov. Only way for us to combat foreign capital is to generate our own. Bill English and Government operating in surplus helps that a little. We citizens need to do our bit to do the rest.
A nation in surplus and citizens and companies in surplus as well, will build capital. And solve a long list of issues.
Bernard will be miffed tho.
I just checked the 2008 PREFU and at that point the crown's total net worth was $105,514 million.
Roll onto the latest half year economic and fiscal update:
http://www.treasury.govt.nz/budget/forecasts/hyefu2012
and the crown's total net worth is now $59,780 million with a forecast of $58,062 million for 2013.
Over the last 5 years the crown has seen 45% of its equity disappear.
There is a lot is show, but not very positive.
Any surplus, if it eventuates, needs to be kept in perspective - especially if it comes with an horrendous current account deficit.
Bang on time for a return of the socialists...017...by then the failure that was Clark et al will be forgotten and Shearer can promise whatever the voters demand....and he will too...
So the real question is how can this mob stay in office beyond 017!.....or will they offer some goodies for votes...like gst down to 10%....
And with Julia's demise just weeks away...expect plenty of Kiwi to fly back home....especially if Shearer is promising the earth...and a free house.
Allow me to pull another Billy Bob and Donkey Kong especial...
Judging by the rise of the real estate market in the last few months, my budget for 2014 indicates s surplus of untold amounts of useless paper, and I don't mean TP!
I am going to be rich, rich, rich... I'll sell the house and go live in a bus... Oh Boy, I am so happy I'll go out and load up the credit card buying useless trinkets thus helping BB and DK grow the nations GDP and pay off THEIR debt.
Yeah... RIGHT!!
HGW
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