Expect 'red streaks' in the May budget, Key says
The government's budget in May will show the cost of the Christchurch earthquake, Prime Minister John Key says.
Thgovernment's budget in May will show the cost of the Christchurch earthquake, Prime Minister John Key says.
"It just might have some deep streaks of red through it, unfortunately," he told reporters today.
"It's going to be a very important budget because it's about signalling the long but necessary process of rebuilding Christchurch."
Mr Key said it was too early to say whether the government would have to borrow more money and he again indicated a taxpayer levy wasn't on his agenda.
"Advice from the Treasury is that a levy would be counter-productive," he said.
"If a levy slows the country down economically and we earn less revenue, we might be cutting off our nose to spite our face."
Mr Key confirmed the government was going to look at the Working for Families scheme as it examined all its spending.
"I think New Zealanders generally would recognise that programmes like Working for Families are very appropriate for low and middle-income earners," he said.
"Whether they have as much relevance for higher income earners is something we need to consider, given we have reduced the top personal tax rate."
Earlier today Mr Key said the earthquake was expected to bite $5 billion out of tax revenue over four years.
In addition to that the financial assistance subsidies announced on Monday carried a $120 million bill and that was expected to rise.
Mr Key said early advice from the Treasury was that in the year to this coming June it was possible there would be no growth in the economy because Canterbury would effectively be contracting.
"That has quite a big impact on your books -- in the order of around $15b worth of lost GDP which translates to about $5b less of tax potentially (over four years)."
Mr Key said the economy last year suffered due to the September quake and he thought the first two quarters of this year would have been positive without the latest disaster.
NZPA and NBR staff
Thu, 03 Mar 2011
Thu, 03 Mar 2011
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Expect 'red streaks' in the May budget, Key says
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