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The Government is considering options for maintaining confidence in the financial system when the Retail Deposit Guarantee Scheme expires at the end of this year, Finance Minister Bill English says.

“During the global financial crisis, many countries sought to reassure retail depositors that their savings in financial institutions were safe,” he says. “In New Zealand, we did that through the Retail Deposit Guarantee Scheme.

Government financial statements for the seven months to January 31 are broadly in line with forecast, but this will change significantly in the coming months as the impact of the Christchurch earthquake becomes clear, Finance Minister Bill English says.

While the latest accounts show spending and revenue consistent with forecasts in the Half-Year Update in December, tax revenue was still about 4 per cent behind Budget 2010 forecasts.

Related Media Release: 06 March 2011

The Treasury’s preliminary assessment of the Christchurch earthquake’s economic impact confirms the need for the Government to carefully consider its priorities, Finance Minister Bill English says.

It also points out that economic growth was slower than forecast previously, even before the latest earthquake. This reflects soft domestic demand – as New Zealanders save more - despite exporters benefiting from higher commodity prices.

The Government has reaffirmed its commitment to provide the financial resources necessary to rebuild Christchurch and the Canterbury economy, Finance Minister Bill English says.

“The earthquake has clearly dealt a considerable human and economic blow to Canterbury, and this will have a significant impact on the Government’s finances and the wider New Zealand economy. Its effects will be felt for some years to come.

The Government has welcomed offers of help from New Zealand’s business community to the Christchurch earthquake recovery effort, Finance Minister Bill English says.

“I joined the Prime Minister today in a conference call with the chief executives of Business New Zealand’s major companies group – representing most of New Zealand’s largest businesses.

“The Government is already mounting a huge rescue and recovery effort in Canterbury and we welcome the support and constructive ideas from the business leaders.

Government financial statements for the six months ending December 31, show the cash deficit heading towards a record $15.6 billion in the current financial year, Finance Minister Bill English says.

The statements show revenue and spending broadly in line with forecasts in the Half-Year Update.

“However with the cash deficit already sitting at a record $13.2 billion and set to rise to $15.6 billion by June 30 – adding to New Zealand's already large stock of foreign debt - there is no room for complacency," Mr English says.

The Government’s multi-billion dollar investment in important construction projects has helped prevent unemployment from peaking well above 7 per cent - as it has in many other countries, Finance Minister Bill English says.

“I have no doubt that thousands more New Zealanders would be out of work without the Government’s considerable infrastructure programme,” he said today in a speech hosted by the Auckland Chamber of Commerce and Massey University in Auckland.

Good afternoon and thank you to the Auckland Chamber of Commerce and Massey University for inviting me back to speak to you this year.

A lot has happened since I was at this forum 12 months ago.

Throughout 2010, aftershocks from the global financial crisis continued to ripple around the world.

Today I’m going to talk about what we are doing to equip New Zealand for this changed world.

A new Investment Protocol under the Closer Economic Relations (CER) trade agreement further strengthens the investment relationship between Australia and New Zealand, Finance Minister Bill English says.

Australian Prime Minister Julia Gillard and New Zealand Prime Minister John Key signed the Investment Protocol in Wellington today.

After tax wages are continuing to rise faster than prices, reflecting the benefits of the income tax cuts last year and ongoing wage rises.

“We do understand that times still remain challenging for many New Zealanders. What really matters for them is whether their wages are rising faster than the cost of living,” Finance Minister Bill English says.

“While we don’t know everyone’s individual circumstances, average after-tax wages have increased 16 per cent and consumer prices have gone up 6 per cent since September 2008.

Finance Minister Bill English today confirmed Budget 2011 will be delivered on Thursday, 19 May - focusing squarely on taking further measures to build New Zealand’s national savings and reducing vulnerability to foreign debt.

“In our first Budget, the National-led Government steered the economy out of recession and the global financial crisis, and mapped a credible path back to budget surplus,” Mr English says.

The Government will carefully consider the Savings Working Group’s final report issued today and any immediate policy decisions are likely to be included in the Budget later this year, Finance Minister Bill English says.

“This report will not only assist ministers in considering the Government’s next steps in building a stronger economy, it will also help an informed and open public debate on the national savings challenge facing New Zealand.

The annual cost of Labour’s spending promises is $5 billion and climbing – and Phil Goff still can’t explain how he will pay for them, Finance Minister Bill English says.

“Every time he opens his mouth, Goff confirms that Labour’s borrow and hope recipe would add hundreds of millions of dollars more to Government borrowing. That would saddle New Zealand with more debt to foreigners, which would have to be paid back with interest.

Finance Minister Bill English, Economic Development Minister Gerry Brownlee and Environment Minister Nick Smith today announced the establishment of an Advisory Group on Green Growth in enabling New Zealand to grow the economy while enhancing our clean, green brand.

“This new initiative is another part of the Government's plan to build a faster growing economy," Mr English said, announcing the advisory group at the National Party’s Bluegreens forum in Akaroa. 

Finance Minister Bill English and State Owned Enterprises Minister Simon Power have formally asked Treasury for advice on the merits and viability of extending the mixed-ownership model to four more state-owned enterprises.

As Prime Minister John Key outlined this week, the ministers have asked for advice on the merits and viability of:

Phil Goff should focus on explaining to New Zealanders how he will pay for his own reckless economic policies rather than deliberately misrepresenting the Government’s economic programme, Finance Minister Bill English says.

"Phil Goff has this week made promises that will leave a hole of more than $1 billion a year in the Government’s books, which Labour will have to borrow to fill or increase taxes on hard-working middle income earners.

"In the meantime, they are reverting to misinformation about the Government’s economic programme.

Government financial statements for the five months ending 30 November show both revenue and spending broadly in line with forecasts in the Half-Year Update in December, Finance Minister Bill English says.

“While there were some overs and unders on the revenue side, overall the results were pretty much in line with those December forecasts,” Mr English says.

“But tax revenue still remained about $1 billion below forecasts issued with the Budget last May – mainly because of lower corporate tax and GST revenue.

Labour’s so-called state of the nation speech today is an irresponsible and very expensive recipe for a huge amount of extra borrowing, Finance Minister Bill English says.

“Labour has clearly learned nothing from the failed policies of its previous term, when New Zealand’s net liabilities to the rest of the world soared to more than $170 billion and we ran the highest balance of payments deficit in the developed world,” Mr English says.

The Government has extended the full range of support the New Zealand Export Credit Office provides to exporters for another three years, Finance Minister Bill English says.

"As the recovery takes hold, exporters still face difficulty getting the trade credit and financial guarantees they need to maintain existing overseas markets and establish new ones," Mr English says.

"This Government has made it clear that one of the best ways to ensure New Zealand grows strongly out of the recession is to increase exports and investment.

Excluding the one-off impact from the rise in GST, annual inflation stayed around 2 per cent in calendar 2010 and is forecast to remain relatively muted for the foreseeable future, Finance Minister Bill English says.

“Price increases put pressure on families, particularly after the difficult economic times we’ve had in the past two or three years,” he says. “So it’s important that we do all we can to take pressure off prices and interest rates.

Finance Minister Bill English has paid tribute to distinguished businessman Sir Richard Carter, who died last week.

“Sir Richard was one of New Zealand’s most highly respected business leaders and I was saddened to hear of his death,” Mr English says.

“He made a significant contribution to New Zealand business and the flow of tributes in recent days confirms the high regard in which he was held by colleagues.”

New Zealand’s economic recovery remains on track, despite figures today showing a small contraction in gross domestic product in the September quarter, Finance Minister Bill English says.

“Before this result, we had seen five consecutive quarters of growth since coming out of a deep recession. I’ve said all along that this recovery would be a bit bumpy at times, and that’s proved to be the case.

Budget 2011 will ensure the Government plays its part in improving New Zealand’s national savings by controlling spending increases and setting a credible path back to budget surplus, Finance Minister Bill English says.

“The Budget next year will clearly outline the next steps in the Government’s programme to lift economic growth, with a particular focus on improving national savings and reducing our reliance on foreign debt,” he said in releasing the Budget Policy Statement and Half Year Economic and Fiscal Update.