Job and wage growth forecasted

Prime Minister John Key outlined Treasury expectations in his post-cabinet press conference today. Photo / Mark Mitchell

New Zealanders can expect stronger wage growth and more jobs in the next few years, according to Treasury forecasts.

Prime Minister John Key outlined expectations in his post-cabinet press conference today, in anticipation of Thursday's Budget.

He said Treasury had forecast strong wage and employment growth over the coming years, and the "growth in average weekly wages is expected to well and truly outstrip inflation".

"It's good growth and it's positive," Mr Key said, but he did not want to be more specific before Thursday's Budget.

When asked if that meant wage growth in the order of 4 to 5 per cent, he said that might be "an educated guess".

But Mr Key acknowledged that Treasury forecast's on wage growth last year was too optimistic.

"There is a degree of putting one's finger in the air when it comes to things like this.

"There are always risks, but our expectation is that Treasury is probably on the money [this year]."

The Government will also have a savings target for the three years from this July.

"You'll be surprised about how much we are hoping to save from a couple of new initiatives," Mr Key said.

The public sector can expect more heat, and bosses would have to meet financial targets, he said.

"People who understand their own operations are in the best position to make financial trade-offs."

If National wins a second term, the current number of Government Departments and Government ministries were unlikely to be maintained, he said.

He acknowledged that cutting Working For Families eligibility at the top end would not save the Government much money, and while his proposed changes to the scheme would not come into place until after the election, most would be better off.

This may mean the changes could cut out more than just households on a combined income of $100,000 or more.

"In cash terms, most will be better off ... Some will be worse off."

He said there would be no changes to Early Childhood Education Funding in this year's Budget.