The government’s sound economic management has begun to pay dividends said the New Zealand Bankers’ Association today in response to Budget 2014.
“The Budget shows that the New Zealand economy is on the right track with a return to a small surplus in 2014/15 and then with surpluses forecast to increase moderately in future years,” said New Zealand Bankers’ Association chief executive Kirk Hope.
“There’s no doubt that after six years of deficits the Crown’s books are improving, and this reflects the responsible fiscal management of the government, and the strength of the New Zealand economy. Overall, this is a balanced and sensible Budget.
“That said, it’s important that we take a cautious view on the state of the economy. Budget 2014 shows that the forecast surpluses in out-years remain modest at best and could easily be put at risk.
“For that reason it’s pleasing to see the government taking a prudent approach to future expenditure and only allowing for moderate increases in government spending. This will also ensure that inflationary pressures are kept to a minimum, and that interest rates are not materially affected.
“This restraint is welcomed and it’s vital that we resist the temptation to move away from careful, cautious government spending and put undue pressure on interest rates.
“We are also pleased to see Budget 2014 projecting net Crown debt dropping to 20% of GDP in 2019/20 and with it the government committing to resuming full contributions to the NZ Super Fund.”
The Budget also contained a number of tax changes including abolishing cheque duty and adjusting tax deductibility for research and development expenditure.