NZ's Budget To Put Government Finances On Stronger Footing

by Mary Swire, Tax-News.com, Hong Kong

06 April 2009

New Zealand's forthcoming Budget will map out a road for economic recovery, as well as a credible plan for getting the government's deteriorating finances in order, Finance Minister Bill English has announced.

Mr English was commenting on news that the Crown's operating deficit had increased to NZD8.4bn (USD4.8bn) in the eight months to February 28.

This largely reflects further increases in Crown financial institutions' investment losses and valuations of long-term liabilities, along with ongoing weakness in tax receipts. The operating surplus before gains and losses was NZD100m(USD58m) - NZD1.2bn(USD698m) lower than the fiscal update published in December.

"It's clear that the global recession continues to have an impact on the government's finances. It's also clear that the patently loose spending policies of the previous Labour-led government were unsustainable," Mr English explained, adding:

"As we prepare for our first Budget on May 28, the new government is performing a delicate balancing act. Our first priority is to ensure that we help New Zealanders get through the worst effects of the recession by preserving entitlements, providing more than NZD1bn (USD582m) of tax cuts from April 1 and bringing forward productive infrastructure investment."

"Our other priority is to set out a credible plan for economic recovery over the medium term. That means investing to increase New Zealand's productivity and growth, while at the same time getting the government's finances in order," English continued, concluding:

"I am confident this government will achieve both of those things."

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