PM Key drops first budget announcement

Wednesday 2nd April 2014

Prime Minister John Key has opened this year's round of pre-budget new policy announcements, promising an average $13.75 million of new spending annually over the next four years to give intensive export market assistance to a further 200 New Zealand firms.

That will take the number of exporters receiving intensive assistance from the government's trade arm, New Zealand Trade and Enterprise, to 700 and will be backed by seven new staff positions in China, three new positions in Latin America, and two additional in the Middle East.

Key used the speech to a business audience in Auckland to reiterate the May 13 budget forecast a fiscal surplus, "albeit a small one", in the year to June 2015 and would add no more than $1 billion in new spending.

Among initiatives would be spending on health and education and "on families and children", fuelling Labour Party speculation yesterday that the government will announce policies similar to its own "Best Start" package for early childhood education and family support, unveiled earlier this year.

Key also addressed concerns that New Zealand could become overly reliant on its trade with China, which has become the country's largest trading partner, with Key and the Chinese president, Xi Xinping, agreeing a target of $30 billion in two-way trade between the two countries by 2020 from around $20 billion at present.

That target would be "a stretch, but it's achievable because every year millions more consumers in China are reaching income levels where they can afford to buy our products," said Key. "China is also planning a rebalancing of its economy towards more consumption.

"So that means it will be a stable and dependable source of export demand in the future," while the decision to invest more on export support into other Asian, Latin American and Middle Eastern markets was part of making sure New Zealand didn't end up with "all our eggs in one basket", along with seeking a broader range of exports to China.

The three extra Latin American NZTE posts will be in Chile, Colombia and Brazil, while the Middle Eastern appointments are in the Saudi Arabian capital Riyadh, and in the gulf state of Abu Dhabi.

Also announced today was the appointment of career diplomat Stephanie Lee as New Zealand's first permanent ambassador to ASEAN, the Association of South East Asian nations.

The budget announcements on the NZTE funding boost will promise $69 million of funding over the next four years, of which $14 million will come from reprioritising existing activity.

Among casualties announced today were NZTE posts in Noumea and Pakistan's commercial hub, Karachi.

On the broader economic outlook, Key said the government was shifting gear from managing recession to managing economic recovery by maintaining spending control to keep pressure off interest rates and the exchange rate, and to start reducing government debt.

"Our focus is on sustaining economic growth over the medium term so the economy doesn't just burn brightly for a couple of years and then run out of oxygen," he said.

The budget would show government spending sinking to 30.6 percent of gross domestic product and falling below 30 percent in future years, and that net government debt would fall below 20 percent of GDP by 2020.

BusinessDesk.co.nz

Comments from our readers

No comments yet