Quake will impact Budget, direction won’t change: Key

Quake will impact on budget, though direction won’t change, PM says

By Paul McBeth

Feb. 24 (BusinessDesk) – Prime Minister John Key expects Christchurch’s 6.3 magnitude earthquake will weigh on this year’s budget, but it won’t deter the government from pursuing its austerity measures.

The government is working with the Treasury to determine the quake’s impact on the economy, but it won’t affect Key’s determination to rein in spending and cut the nation’s reliance on foreign debt. The Prime Minister or his deputy Bill English will probably make an announcement on its impact in the next few weeks.

“Clearly there’s going to be some implications on the government’s books this has been a major earthquake, but in the overall direction we want to take New Zealand is exactly as it was,” Key told a media briefing in Wellington today. “The basic issues New Zealand faced, and the imbalances identified in the economy are as relevant today as they were last week. So we need to become more export-oriented, we need to have higher savings rates and be more productive as a country.”

Savings and investment have already been flagged as the major theme for this year’s budget, and Key signalled new spending will be cut by as much as $300 million to between $800 million and $900 million. The Savings Working Group, tasked with finding ways to lift the nation’s poor savings record, warned the government it needs to act immediately to bring the economy away from the brink and reduce its reliance of offshore funding.

Key also reshuffled Gerry Brownlee’s ministerial warrants to leave his sole focus on the Canterbury earthquake recovery, and appointed Maurice Williamson as Brownlee’s associate. Simon Power will act as Leader of the House, Hekia Parata will take temporary responsibility for energy and resources, and David Carter will stand in for economic development.

The Prime Minister and English will hold a conference call with business leaders this afternoon, and will be testing the waters to see what corporate New Zealand can do to help in the relief and recovery of the city.

The government expects to implement a “broader and slightly different” support package for employees than the one set up for the September quake, and Key hopes to make an announcement on that next week, he said.

(BusinessDesk)

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