BPS/Defu show economic and fiscal resilience

  • Michael Cullen
Finance

18 December 2001Media Statement
BPS/DEFU show economic and fiscal resilience

“The 2002 Budget Policy Statement and December Economic and Fiscal Update testify to the quality of the government’s economic and fiscal management,” Finance Minister Michael Cullen said today.

“They show a pattern of rising surpluses – from $1.2 billion this year to $3.9 billion in 2005/06 – which are more than sufficient to cover the planned contributions to the New Zealand Superannuation Fund.

“They also show that the economy has the resilience to weather the global downturn and to rebound strongly when world demand recovers. The Treasury has cut back its budget night growth forecast from 3.3 percent to a still respectable 1.9 percent, and has growth bouncing back to 3.7 percent in the year to March 2004.”

Dr Cullen said the government’s third budget would deliver the largest health funding programme in New Zealand history and would underline the government’s commitment to education in all its forms and at all levels – from pre-school through to tertiary.

“Budget 2002 will be the final budget of our first term and will continue the focus on economic transformation and social stability that we started in Budget 2000.
We have introduced a range of initiatives to promote business and regional development and to rebuild New Zealand’s infrastructure, including a large investment to restore Air New Zealand to viability.”

The government’s borrowing requirements over the next five years were forecast at $10.6 billion. Of this, $4.1 billion was earmarked for asset acquisition - the $1.035 billion Air New Zealand rescue package, the Auckland rail deal, and the construction of new schools, hospitals, prisons and courts.

The borrowings would also cover $3.9 billion for student loans; $1.8 billion to refinance private sector district health board and Housing New Zealand Corporation debt, and $1 billion net capital injections into State Owned Enterprises and Crown Entities, including $83 million to New Zealand Post for Kiwibank.

“As a result of these commitments, progress toward our objective of reducing gross debt to 30 percent of GDP will be somewhat slower than initially anticipated,” Dr Cullen said.

“We have delivered on our key election promises and on our promise to improve the lives and living standards of ordinary New Zealanders – at work, in their homes and communities and in retirement. We have done this while maintaining a tight control on spending.

“Expenditure as a proportion of GDP was 33.8 percent when we took office. It is forecast to be 32.9 percent when we go back to the electorate next year. That is an extraordinary achievement given the huge amount of progress we have made,” he said.

Contact: Patricia Herbert [senior press secretary] 471-9412, 021-270-9013, patricia.herbert@parliament.govt.nz