PM issues 'boring' Budget warning, promises 'no surprises'

PM Jacinda Ardern speaks at the China Business Summit. Photo/NZH Michael Craig.

There will be "no surprises" in Thursday's Budget, Prime Minister Jacinda Ardern said this morning.

"In fact, some might even, unfairly, characterise it as boring," she told the crowd at the China Business Summit in Auckland.

"No politician would describe a Budget as boring," she added.

But the new Government's first fiscal blueprint would underline a commitment to a stronger and fairer economy, to being fiscally responsible and "to providing certainty that I know business is very keen to see."

The latest move to dampen expectations of spending surprises comes as a fresh Budget preview by ASB economists describes the Government as "under pressure" in key priority areas such as health, education and housing.

Ardern reiterated the recent pledge by finance minister Grant Robertson to hitting debt targets and delivering sustainable surpluses.

"But we will not generate an artificial surplus by underfunding essential services," she said. "We will take concrete action to deal with the failing infrastructure such as hospitals and schools and our congested roads."

People could expect to see a plan that balanced the immediate needs with long-term issues.

"It is a plan that we cannot achieve in one Budget," she said. "But on Thursday...we'll be laying the foundations as we transform the economy into one that is more productive mores sustainable and more inclusive."

In a Budget preview released this morning, ASB economists said they expected to see a careful "balancing act" on Thursday.

"We expect Budget 2018 to show small operating surpluses and a declining net debt to GDP profile, mixed with modestly higher spending and investment," they wrote.

They noted that the Government was under some fiscal pressure and "has had to scale back some of its spending plans."

In order to meet commitments to key areas like health, education and housing, ASB said it expects "Budget 2018 to find room for spending in these key
areas, but not a lot elsewhere."

Last Thursday, finance minister Grant Robertson confirmed plans for $42 billion of net capital spending over the next five years in a pre-budget speech.

He said the spending, which was first announced with the half-year economic and fiscal forecasts (HYEFU) last December, would be funded from a number of sources, including repaying debt at a slower rate than the previous government, as it has already announced, along with higher-than-expected tax revenue.