Budget will confirm track to surplus in 2014/15Finance Budget 2013
The Budget on 16 May will confirm the Government remains on track to surplus in 2014/15, Finance Minister Bill English said today.
It will also confirm the need for responsible fiscal and economic management beyond then so the Government can start repaying debt and investing more in priority public services.
“The Government is in the midst of a comprehensive programme to make government and the economy more effective, and to create conditions to give businesses and families more confidence to invest in our shared future – despite global economic uncertainty,” Mr English said in a speech to the Wellington Employers’ Chamber of Commerce.
Getting the Government’s own finances in better shape remains an important part of that programme.
“The Government has set a target of returning to fiscal surplus in 2014/15 and the Budget will set out updated forecasts next month.
“But I can confirm that it will show the Government remains on track to surplus in 2014/15, as a result of our careful management of the accounts.
“That is a considerable achievement – and a significant turnaround in the space of just a few years. Just two years ago, we ran an $18.4 billion deficit, half of which was the cost of contributing to the rebuild of Canterbury.
“Returning to surplus in 2014/15 will complete only the first part of our task.
“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,” Mr English said.
Looking beyond the return to surplus, the Government’s focus would shift toward using forecast surpluses after 2014/15 to achieve its second fiscal objective: bringing down the Government’s net debt to 20 per cent of GDP by 2020.
“This reflects what the Government considers to be prudent levels of debt in the current economic environment.
“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,” Mr English said.
“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.
“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.”
The Budget will also continue to focus on macro-economic stability.
“Conventional monetary policy, predictable fiscal policy and a sound financial system are precious advantages in an unstable world. We will hold on to them,” Mr English says.