Budget 2015 continues responsible economic direction

Budget 2015 continues the government’s responsible economic direction the New Zealand Bankers’ Association said today.

“The Budget shows that the New Zealand economy remains on a sound track with a clear path to surplus forecast,” said New Zealand Bankers’ Association chief executive Kirk Hope.

“Despite lower than forecast tax revenue, meaning that a surplus will not be reached this year as predicted, the important thing is that a small surplus is expected in 2015/16, rising to a $3.6 billion surplus in 2018/19.

“Budget 2015 shows that the overall fiscal trajectory remains positive, and that’s a sign the New Zealand economy is in good shape. We welcome this and the framework that the Budget puts in place to support this steady growth.

“It’s pleasing to see that the reduction in crown debt remains on-track and that unemployment is forecast to fall below five per cent by 2016/17, while economic growth is set to average 2.8 per cent over the next four years. These are all signs that the economy is heading in the right direction.

“The priority placed on reducing income taxes from 2017 is also commendable.

“That said, the missed surplus for 2014/15, and reduced tax revenue, shows the relatively fragile nature of New Zealand’s economic growth story.

“That’s why it’s important that cautious, careful government spending is maintained. The government needs to remain prudent in its expenditure and continue to exercise restraint.

The Budget also confirmed a number of housing-related steps aimed at addressing challenges on both the demand and supply side of the equation.

“These are constructive steps and will aid housing supply and affordability especially in Auckland. It’s good to see the government moving to strengthen tax rules on residential property and bolstering IRD’s resources in this area.

“However, the key to addressing housing affordability remains freeing up supply. We welcome the initiative in Budget 2015 establishing a $52.2 million capital contingency fund to facilitate housing development on crown-owned land in Auckland.

“This move will help to boost the supply of affordable housing in the Auckland region.

Budget 2015 also removes the $1000 kick-start payment for people enrolling in KiwiSaver.

“While this move is understandable from a cost perspective, it’s important the government does not step away from a firm focus on incentivising savings.

“We’d encourage the government to now consider making a strong commitment to auto-enrolment in KiwiSaver,” Hope said.

ENDS

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