20 Nov 2014

English hints surplus may be elusive

4:29 pm on 20 November 2014

Finance Minister Bill English has given the clearest hint yet that the Government's books might not get into surplus this financial year.

Finance Minister Bill English releasing the Government financial statements.

Finance Minister Bill English said it would be difficult to get the public finances back into surplus. Photo: RNZ / Diego Opatowski

The Government has been promising for years to return a surplus in 2014-15, but Mr English said it now expected its income this year to be lower than expected.

Bill English told a business breakfast in Auckland today that while New Zealand would experience solid growth, falling dairy prices and low inflation would make it difficult to get the public finances back into surplus after years of deficits.

He said this would affect farm and company incomes, which in turn would mean lower revenue for the Government.

On the other hand, he said, low inflation and a strong dollar would make life easier for households, as the cost of living did not rise as much as could be expected with the rate of economic growth.

The Green Party said today Bill English is softening up the public for the seventh successive deficit under National.

Co-leader Russel Norman said the Government had not been shy about using the promise of a return to surplus for its own political gain and was now backing away from earlier assurances.

"Bill English himself has made a really big song and dance about reaching a surplus in this financial year, and it was a critical part of their claim towards economic credibility. So I think it is fair enough to hold them to account for it."

Labour's associate finance spokesperson David Clark said the Government had failed to heed warnings about New Zealand's reliance on dairy and its exposure to falling commodity prices.

"New Zealand has a lot of eggs in one basket, and the Government has failed to diversify. With that failure to diversify comes the constant risk that we will struggle to enjoy the prosperity that we could and should as a nation."

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