Govt's surplus target puts big-ticket spending under microscope - English

(BusinessDesk) - The government's margin-of-error target to meet an operating surplus by 2015 has put spending on its biggest programmes under the gun, according to Finance Minister Bill English.

The government plans to keep its spending programme in check as the deteriorating global economy puts its budget surplus at risk, singling out "long-term drivers of costs in areas such as welfare, health, education and law and order," according to Mr English's budget policy statement.

"The forecast surplus of $66 million is not large," Mr English told a media briefing in Wellington. "The need for control does not expire once we get into surplus."

The budget policy statement spending priority will be given to health and education in the 2013 budget, with other departments and agencies expected to stay within existing baselines.

"We're not willing to get to surplus at any cost to the economy, because we're already on a pretty solid rate of fiscal consolidation," Mr English says. "We will continue with expenditure constraint."

The Treasury is forecasting social assistance grants, including benefits and pensions, rising to $24.31 billion in 2017 from $21.16 billion in 2012. Of that, pensions will rise to $12.69 billion by 2017 from $9.58 billion while family tax credit, and benefits will remain relatively flat over the forecast horizon.

Total health spending is forecast to rise to $13.71 billion by 2017 from $13.65 billion in 2012, education is expected to increase to $13.35 billion from $12.41 billion, and law and order costs are forecast to rise to $3.75 billion from $3.59 billion over the projected horizon.

The government has imposed zero budgets in recent years as it keeps a lid on spending and prevent its debt levels from ballooning after the global financial crisis in 2008.

Mr English will unveil spending plans for its future investment fund at next year's budget, which is expected to take $5 billion to $7 billion raised from its sell down of stakes in state-owned enterprises and use it for new capital investment.

The government will also use the next budget to support and extend its business growth agenda to assist businesses become internationally competitive.

The 2013 budget will also show what actions the government is taking to achieve its 10 policy targets as part of the better public services programme.


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Hey Bill, what about some labour law reform as promised so NZ business can make a decent return for the risk and resultingly pay the government some more tax to help fund your plans!

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Smells like blue socialism ... $24 billion in "social assistance grants".

Is NZ really full of that many unfortunates that cannot support themselves? The total GDP is only $190 billion ... 13% of GDP on supporting the unfortunate, really?

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"The forecast surplus of $66 million is not large," Mr English told a media briefing in Wellington. "The need for control does not expire once we get into surplus."
You are correct Mr English, but sadly the NZ electorate want an expanded bureaucracy immediately NZ's books are back in order. If they don't get it they will vote Labour in and Labour will do it.
The real question is, "How do we protect all the good hard work done so far"?

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Tax cuts a few years ago.....

There was no need and no real reason - apart from the sadly obvious - from near zero government debt to this and no real growth current or future to show for it - this seems pretty desperate.

And yes - the GFC has little to do with this outcome.

Oh dear - smile please everyone?!?

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right on #1 and #2!!!

Bill, has it ever occurred to you to look at how to keep business in business to generate more GDP and then help it to make more profit to create tax revenue?
That I thought was basic National Party Doctrine

Bill have you realized your pie is shrinking? (business is contracting, quality employees are departing to Aust = less GST, PAYE let alone less company tax) thats your problem. - you need a solution

Bill we are indanger of becoming a country of beneficiaries (those with get up and go having got up and gone) - you seem to have accepted that. is that correct?

So Bill how far away are we from Greece? have you accepted that is the inevitable outcome?

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