Audrey Young is the New Zealand Herald’s political editor.

Key still hopeful of early return to surplus

Prime Minister John Key appears on National Party billboards and alongside individual candidates. Photo / Christine Cornege
Prime Minister John Key appears on National Party billboards and alongside individual candidates. Photo / Christine Cornege

Prime Minister John Key revived the prospect of National getting the books back to surplus earlier than the 2014-15 target it confirmed on Tuesday after the Treasury updated its forecasts.

He also said yesterday that National would campaign this election on a "very, very, very austere programme".

Mr Key revived the prospect of an earlier surplus a day after Labour finance spokesman David Cunliffe said Labour would probably match National's target.

National's billboards pledge that the party would return to surplus "sooner".

The implication is "sooner than Labour".

Mr Key has flirted with the notion of a return to surplus earlier than 2014-15 though Finance Minister Bill English has been more conservative, especially since his trip in September to World Bank and IMF meetings in Washington.

Mr Key too, after being briefed by Mr English on the "very dark mood" over the global economy, conceded that hopes of an early return to surplus had dimmed.

"We've quietly been hopeful that we might get there slightly earlier. That might now mean that that's not possible and that we're at '14-15 again," he said at the time.

Yesterday Mr Key told an audience in Kapiti that there would be a return to surplus in 2014-15, "maybe slightly earlier".

Afterwards, he rejected a suggestion that political parties should be outlining during the campaign what changes they might make if the Treasury's downside scenario were to eventuate with a sharper drop in trading partner growth.

That scenario estimated that New Zealand's GDP could be a cumulative $35 billion lower over the five years to June 2016.

Mr Key mistakenly said the Treasury had estimated there would be a one-in-five chance of a downside scenario.

It actually estimated there was "a one-in-five chance that the New Zealand economy performs worse than in this scenario".

Mr Key said that, as had happened after the 2008 election, which was held in the midst of the global financial crisis "people can always change their position".

"But you've got to do that with I think good faith. What we campaign on is what we believe and we are campaigning fundamentally on a very, very, very austere programme."

National would not be talking about having a capital budget because that would be funded by the capital released from partial asset sales, he said.

National had cut new Budget spending to about a third or a quarter of what Labour was spending in its last year.

And National was talking about "a massive reprioritisation of money in the public sector".

Additional reporting: Derek Cheng

- NZ Herald

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