Fiscal Strategy
Reconfirming the fiscal strategy
The Government is committed to its fiscal strategy, which includes:
- returning to fiscal surplus as early as practical and returning net debt to prudent levels
- maintaining a broad-base, low-rate taxation system that minimises economic distortions, and
- ensuring Crown capital is used effectively and efficiently.
Budget 2011 outlines how the fiscal strategy will be achieved through a multi-year process of reprioritisation and more efficient use of resources. The Government will ensure that we return to sustainable fiscal surpluses from 2014/15 and that net debt is returned to prudent levels.
Budget 2011 decisions mean that, despite the impacts of the two Canterbury earthquakes, the slower economic recovery and various other setbacks, the forecast return to operating surpluses (before gains and losses) is one year earlier than forecast at the Half Year Economic and Fiscal Update (Half Year Update). Net debt will be slightly higher initially, owing in part to absorbing the cost of the earthquakes. However, in the long term, net debt will be lower than that forecast last year and far below the forecasts the Government inherited in 2008.
