Surplus by 2015 'still in sight'

Changes: Bill English says the high numbers of Kiwis on benefit is a waste. Photo / Mark Mitchell

One in eight New Zealanders aged 18 to 64 is on a benefit, about half of them having spent at least five of the past 10 years on welfare, Finance Minister Bill English says.

That was not only bad for the beneficiaries and their children but a waste for society and taxpayers, he said in a speech to the Auckland Chamber of Commerce and Massey University yesterday.

The Government's welfare reforms, aimed at giving better support and incentives for beneficiaries to move off welfare, would be under way in the next few months, he said.

In the broader environment, public services needed to be delivered with little or no extra money.

Government spending (excluding earthquake-related costs) in this fiscal year would be $71.4 billion, up 11.5 per cent or $7.4 billion on three years ago. While that increase was an appropriate response to the global financial crisis, it could not continue.

Short of a meltdown in Europe sending the global economy into recession, the Government remained committed to returning to surplus by 2014/15, he said.

"The track record of European politicians so far is that, in the end, they generally take the measures needed to stabilise their immediate problems, once they realise doing nothing will make things much worse."

English's comments follow a Budget Policy Statement last week which projected larger deficits over the next three years and smaller surpluses the following two years - a cumulative $5.6 billion hit to the Government's bottom line, largely due to weaker economic growth outlook in the near term.

"Compared to a lot of other countries, we're in pretty good shape," he said.

Australia and China, our two largest trading partners, should maintain relatively strong growth. "Our terms of trade will remain elevated on the back of demand for our major export commodities in emerging markets," he said, ignoring the risk of tension around Iran triggering an oil shock.

The Christchurch rebuild was expected to add 1.25 per cent to growth each of the next five years. ANZ forecasts out yesterday, however, put the figure at 0.75 per cent.