Budget hits the right notes

The government continues to guide the economy in the right direction said the New Zealand Bankers’ Association today in response to Budget 2013.

“The government’s prudent fiscal approach to the economy, underpinned by our strong and stable banking sector, is crucial to our continuing economic momentum in a still fragile global economy,” said New Zealand Bankers’ Association chief executive Kirk Hope.

“The Budget announcement that the government had signed a memorandum of understanding with the Reserve Bank on macro-prudential tools builds on recent consultation with the banking sector, and we look forward to continuing to work closely with the Reserve Bank on the final shape of these tools.

“Concerns have been raised about the overheated Auckland housing market and we applaud the government’s move to address this through the Auckland Housing Accord. This is a positive initiative and recognises this is a supply-driven issue, not a credit-driven bubble.

“If it’s possible to meet the target of 39,000 new homes being consented in Auckland, and when we see the Christchurch rebuilding programme take off, then price pressures should start to ease as supply increases in these critical markets. This will lessen the need to apply any macro-prudential tools.”

The government also announced an intention to explore “micro-financing” partnerships with the financial sector to provide low cost small loans to those on low incomes.

“This would help protect low income families from loan sharks and provide access to responsible sources of lending. We welcome the government’s interest in this area and look forward to working with them on this issue and gaining a greater understanding of what is being proposed.”

“We would have welcomed a greater focus in the area of tax incentives for savings, which would support future economic growth. However we acknowledge the government’s commitment to achieving its surplus targets,” added Hope.