Executive Summary
The National-led Government was re-elected in 2011 with a clear plan to build a faster-growing economy supporting more jobs and rising incomes, in the face of ongoing economic uncertainty in many parts of the world.
The Government's plan involves returning to surplus and reducing debt; pushing ahead with a wide-ranging programme of microeconomic reforms to create a more productive and competitive economy; driving better results and better value for money from public services; and supporting the rebuilding of Christchurch.
This programme is helping New Zealanders and their families to get ahead, encouraging personal responsibility and rewarding people for hard work and enterprise.
Budget 2013 will continue to implement this plan.
The Half Year Economic and Fiscal Update shows the Government posting a modest operating surplus of $66 million in 2014/15 - down from the $197 million surplus forecast in Budget 2012 - and net core Crown debt peaking below 30 per cent of Gross Domestic Product (GDP). Thereafter, surpluses are forecast to increase and debt is forecast to fall.
Continued control over spending has allowed the Government to remain on track to surplus, despite the impact on revenue of more difficult global economic conditions.
The Half Year Economic and Fiscal Update shows economic growth averaging 2.5 per cent over each of the next five years, together with increasing numbers of New Zealanders in employment and a falling unemployment rate.
The global economic environment remains uncertain and this makes it even more important to maintain clear and credible fiscal settings. This is the time for sensible and responsible policy - not for untried economic experiments.
Budget 2013 will confirm the Government's commitment to responsible long-term fiscal management. This will require restraint well beyond the surplus target of 2014/15, so we can pay down debt and build a buffer against the next global shock, while at the same time resuming payments to the New Zealand Superannuation Fund (NZS Fund) and targeting investment at priority public services.
At the same time as getting its own finances in order, the Government is continuing to address New Zealand's significant economic challenges, including a sustained rebalancing towards the internationally competitive sectors of the economy. A broad range of targeted microeconomic reforms currently underway, through the Government's Business Growth Agenda, will help to lift New Zealand's productivity and competitiveness.
Budget 2013 will also contribute to the Government's other main priorities of delivering better public services within tight financial constraints and supporting the rebuilding of Christchurch.
