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Key says budget on track for 2015 surplus

BUSINESSDESK: Prime Minister John Key has restated the government's confidence it can run a budget surplus in the year to June 2015, just days after Finance Minister Bill English questioned its achievability.

"Budget 2012 will show we are on track to return to surplus – as we promised – in 2014-15," Mr Key said in a speech to the National Party's Otago regional conference yesterday.

That is an advance on Mr English's commitment four days ago, in a pre-Budget speech to the Wellington Chamber of Commerce, that ministers "remain focused on staying on track to surplus".

Achieving fiscal surplus, very close to balance, has become a political totem for the Key government, although Mr English has warned events such as a sharp deterioration in the world economy or more natural disasters could lead to a rethink.

Mr Key's comments this morning signal the government has already found the extra $640 million a year in either spending cuts, revenue increases or faster growth required to close the deficit gap in three years.

With his party riding high in the polls despite months of decisions judged miscalculations by both pundits and Opposition MPs, Mr Key said many New Zealanders were supporting the government's careful fiscal approach.

"One of the lessons from last year’s election was that New Zealanders expect their government to do what they’ve been doing – tightening its belt, paying down debt and spending carefully," he said.