Bill English says spending pressures were mounting before the earthquake

Bill English says there are unlikely to be "big windfalls" in the next set of Treasury forecasts. Photo/ Michael Craig

Finance Minister Bill English is moving to lower expectations of a windfall in the Government's books ahead of new forecasts, saying spending pressures even before this week's earthquake have been building up.

"There will be significant extra spending generated by the earthquake but it comes on top of other spending pressures that have been building up for a while," he told the Weekend Herald.

Among those big ticket items included issues related to pay equity claims, the need to fund a significant growth in the prison population which would put pressure on operating and capital spending, as well as the pressures brought about by population growth.

Asked whether there was less chance of there being a tax-cut package in next year's budget, he said it was too soon.

"It is yet to be seen when you take into account some of these spending pressures.

"Even though the economy is stronger we have yet to see whether the surplus is going to be stronger in the short term."

"But an accumulation of issues means it is unlikely to be big windfalls.

English was also not yet sure if the Government would be borrowing to fund the Kaikoura infrastructure repair or defer projects already in the funding pipeline.

"That will all have to be considered. We don't know the answer to that."

English said the Government's target of reducing net Crown debt [from 25 per cent currently] to 20 per cent of gdp by 2020 remained in place but implied it could be delayed if necessary.

"The fiscal strategy stays in place until it is officially changed."

"We want to get to 20 per cent by 2020 and we've got other large capital calls on us - the housing infrastructure fund, funding of the CRL [City Rail Loop] in Auckland, pretty significant demands from the Defence Forces."

Defence Minister Gerry Brownlee released the Government's third iteration of a military hardware plan outlining $20 billion spending up to 2030.

State Highway one has suffered seven major slips in the 7.8 quake and the rail line connecting Picton to Christchurch has been wrecked in several places in damage likely to total billions.

The 2015 - 16 financial year ended with a surplus of $1.8 billion, much healthier than the $668 million forecast in the May Budget, $719 million in the current year and $2.4 billion in the year after that.

Those forecasts will be updated on December 8 in the half yearly economic and fiscal update.

The Government has paid out almost $17 billion for the Christchurch rebuild, almost doubt the $8.8 billion it estimated in May 2011.

Prime Minister John Key said this week it was too soon to tell whether the quake made tax cuts less likely.

"It is impossible to say what programmes will be affordable and what will not be going forward because it is not just as simple as the cost for the earthquakes," he told reporters on Thursday.

"There's many different factors that make up whether the Budget is affordable and ultimately what the final cost looks like against projected surpluses.

"So you wouldn't want to say that things are in or out today."

The earthquake would put some pressure on the money that's available.

"But ultimately the fact that we are back in surplus gives us choices and we just need to work our way through them."

EQC has access to $4.69 billion of reinsurance protection but also has a Government guarantee to meet any future claims.