Audrey Young

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

Budget: English to ease purse strings

Finance Minister Bill English will loosen the purse strings today in his fifth Budget, which he says will be about getting back to surplus, addressing the risks of a housing bubble and building economic momentum.

After two budgets of zero new spending, Mr English has budgeted $800 million for new spending in the next financial year which will still end up in deficit - $2 billion at the last forecast.

However, the Budget forecast will confirm the much-vaunted return to surplus for the 2014-15 year.

Getting to surplus was important from the point of view of the Government's books, Mr English told reporters yesterday, but the surplus had also become a measure of whether the economy was on track.

"And the good news is that we are on track. We can look forward with a bit of optimism having been through some hard times, job security will be a bit better, and there is more capacity for incomes to lift."

The ordinary New Zealander was working hard and "what they want to know is that we are on the right road, and the Budget will demonstrate we are on track, we are building some momentum and they deserve to have a bit of optimism about where we are going".

The Government will put the House into urgency tonight to sit tomorrow and possibly Saturday to pass Budget-related legislation, including some related to housing affordability measures.

Mr English said the Budget would have some measures in it to help first home buyers but the impact would not be immediate or affect them directly.

The measures would be focused on ensuring that a "runaway housing market" did not interfere with positive momentum of the economy.

The economy would not benefit from a compound 12 or 15 per cent house price increase.

"We want to do what we can to minimise that." Mr English said he hoped the Budget's housing measures would have some impact over the next couple of years.

"It depends on the will of the participants and the tools that are available to them."

The Auckland Council had shown it understood what needed to happen in its housing market - "that's a positive step forward and the Government needs to back that up with some tools".

Prime Minister John Key said this week that the forecast surplus in 2014-15 would continue to be small - at the last forecast it was $66 million.

He said it had been an "easier" Budget to put together after a couple of zero Budgets.

In past years the Government had had to take money from other areas for education and health.

"This time we don't have to do that."

Read more: Budget tailored to keep the wavering voters on board

- NZ Herald

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_n3 at 20 Sep 2014 17:43:57 Processing Time: 515ms