Conclusion
The fiscal position has improved from last year, owing to the economy returning to growth and the positive impact of Budget 2009 decisions to restrain new spending and postpone tax reductions. However, even with continuing spending discipline and economic growth forecast to strengthen, the operating balance before gains and losses is expected to be in deficit until 2015/16. The short-term aim of the fiscal strategy is straightforward - to return to surplus as quickly as is practical. Each year of deficit means an increase in public debt and higher debt servicing costs and increases the vulnerability of the Crown and the economy. Balancing the books and lowering debt provides choices around future fiscal policy and better prepares the country for future shocks, the ongoing pressures on spending and revenue as well as those that will occur with demographic change.
Hon Bill English
Minister of Finance
20 May 2010
