Fears that the New Zealand government will miss its target of returning to budget surplus in 2014/15 have prompted a further hunt for savings in public sector spending and fresh scrutiny on any new spending initiatives.
BUSINESSDESK: Fears that the New Zealand government will miss its target of returning to budget surplus in 2014/15 have prompted a further hunt for savings in public sector spending and fresh scrutiny on any new spending initiatives.
Prime Minister John Key told his post-Cabinet media conference the reason for seeking a zero budget this year was concerns that the current wafer-thin forecasts for a $370 million surplus in the year to March 2015 were under threat from weak economic activity and a falling tax take.
While there would be new spending in health and education, other departments would have to make up the difference, compared with the announcement in the February 16 Budget Policy Statement that there would be an $800 million “operating allowance” in the budget to be delivered on May 24.
However, Key told TVNZ’s Q&A programme on Sunday that the government would deliver its second “zero budget” in a row this year.
He declined to comment on whether there would be similarly zero effect in the forecasts for the following two years’ budgets, but ruled any major new tax changes.
Government ministers regard the return to budget surplus in 2015 as a crucial credibility test for political audiences and financial markets.
On other topics, Key said he had been given no indication by the ministers responsible for making a decision on the Overseas Investment Office’s revised recommendation, delivered late last week, on the sale of the Crafar farms to the Chinese bidder, Shanghai Pengxin.
He also shrugged off the departure of one of the Ministry of Foreign Affairs and Trade’s lead trade agreement negotiators, Nigel Fyfe, who was in Korea last week with Key negotiating the Korean free trade agreement and is understood to have had the lead on the Indian FTA negotiations begun last year.
Fyfe is moving to a deputy secretary role at the Ministry of Justice.
Key said he was pleased to see senior public servants pursuing new career opportunities within the New Zealand public service and this was important in developing leaders for the sector.
He expressed personal disappointment that several recent government agency chief executives had been hired from overseas, as his preference would be for New Zealanders to fill such roles.
