In a far cry from the Decade of Deficits Day in 2008, the 2014 Prefu, the symbolic pre-election opening of the books, has passed with barely a ripple; Stuff reports:
The economy is growing strongly, but Treasury has cut the amount it
expects to raise in tax and with it, the size of future surpluses.
Today the Treasury released the pre-election economic and fiscal
update (Prefu), giving an update on the state of the Government's books
just a month out from the election.
Crucially, Finance Minister Bill English's long promised surplus for
2014/15 is said to be on track by Treasury, the Crown's official bean
counter. The surplus is, in fiscal terms, wafer-thin at $297 million,
down from $372m in the last forecast, and equivalent to just 0.2 per
cent of total economic output.
But the outlook for surpluses in the following years is markedly
weaker than it was in May's Budget, delivered just two months ago.
In each of the next three years Treasury has cut the projected
surplus by $500m, meaning the combined surplus between now and mid-2018
is $6 billion, some $1.5b below what it was expected to be in autumn.
The lower surplus forecasts means there is less scope for new
spending by the Government, and that Crown debt would take longer to
reduce.
Today Treasury said debt, in nominal terms, would now peak at $67.9b
in 2018. It was expected to peak at $65.5b in 2017. With debt taking
longer to fall, Treasury said, based on current settings, payments to
the NZ Superannuation Fund, put on hold when National came to office as
the recession hit, would be delayed a year to 2020/21.
Nevertheless, the economy in general is "growing strongly", Treasury Secretary Gabriel Makhlouf said.
Forecast to grow at an average of 2.8 per cent over the next four
years, Makhlouf said this was "above its sustainable long term capacity
to grow" meaning inflationary pressure on the economy is building with a
strong residential housing market in Auckland and Christchurch.
That the economy is forecast to continue to grow strongly, but not too strongly, is good news indeed. Unemployment is falling, more people are in employment than ever before in New Zealand's history, exports hit $50 billion for the first time ever, and inflation remains low. Much of that can be attributed to Bill English's "steady as she goes" management of the economy through the Global Financial Crisis and the recession which followed.
And Treasury Secretary Gabriel Makhlouf sounded a warning today in releasing the Prefu:
Australian Federal Treasurer Joe Hockey is in town. And as he ponders the sea of red ink in the books he is trying to balance, a legacy of Labor/Green profligacy across the ditch, the politics of envy have reared their head, in the nicest possible way; TVNZ reports:
Joe Hockey has called New Zealand's economy "the envy of the world" during his first visit here as Australian Treasurer.
Mr Hockey told TV ONE's Breakfast today that Australia could learn some lessons from their Kiwi neighbours.
"New Zealand has done a splendid job, the Key government is a
standout government around the world and as a result of that it is
heading towards a surplus," he said.
"New Zealand is starting to live within its means."
Delivering his first budget this year, Mr Hockey said he was forced
to slash spending by $10 billion because of the previous Labor
government's overspending.
"They took us to a position where if we don't take immediate action we will face much bigger debts," he said.
"If you make the difficult but important decisions up front then you
get the benefits down the track. We've got a long way to go to catch up
to the budget position of New Zealand."
Joe Hockey started out in the same position that Bill English was when he inherited the New Zealand books in 2008. At the time, Treasury was forecasting a Decade of Deficits. History will show English's parsimonious financial management has done the job, and the books are headed back into the black four years ahead of prediction.
It's rare that our trans-Tasman cousins are so effusive about New Zealand, but on the issue of the respective economies, Joe Hockey has little option. He inherited a mess from Kevin Rudd, and he could do much worse that take some advice from Bill English as to how to get his books in order.
In the meantime, migration to Australia has almost dried up as the former Lucky Country is down on its luck. Thousands of those who left New Zealand during the recession to try their luck over the ditch are returning as New Zealand returns to economic prosperity, and as the Australians recover from their Rudd/Gillard hangover.
Who's the Lucky Country now Joe?
There's more good news on the jobs front this morning; the Dom-Post reports:
The number of jobs advertised online is growing across most industry groups and occupations, government figures show.
The latest Jobs Online report from the Ministry of Business,
Innovation and Employment (MBIE) said skilled vacancies rose by 2.5 per
cent in June, while all vacancies increased by 1.7 per cent compared
with the month before.
Over the past year, skilled vacancies advertised online increased by
16.5 per cent, while all vacancies increased by 17.2 per cent, MBIE
said.
The biggest increases in skilled vacancies in June were in the
construction and engineering industries, up 7.4 per cent, and the
hospitality and tourism sector, up 1.4 per cent.
Over the year to June, vacancies in these industries have increased by 40.2 per cent and 27.6 per cent respectively.
The only industry to show a decrease in advertised jobs in June was
the healthcare and medical sector, with vacancies down 0.4 per cent
compared with the month before.
Skilled vacancies increased across all occupation groups in June,
with the strongest increase shown for managers, up 2.4 per cent, and
professionals, up 2.3 per cent.
The report showed the number of skilled vacancies increased in all regions in June as well over the year.
The biggest monthly regional increase was in the Auckland region, up
2.9 per cent, followed by the South Island (excluding Canterbury),
which was up 1.8 per cent.
Over the year, the biggest increase was in the South Island
(excluding Canterbury), up 26.1 per cent, followed by Auckland and
Canterbury, which were up by 17.5 per cent and 14.6 per cent
respectively.
These are impressive figures, and confirm the finding of the Household Labour Force Survey for the March quarter which showed the Labour Force Participation Rate at its highest ever level.
The next HLFS is due out in early August, and there is likely to be a further fall in unemployment. That is further evidence that the economy is growing, employers are hiring, and that Bill English's conservative financial stewardship has steered New Zealand in the right direction. It's little wonder then that around two thirds of those surveyed in the two most recent polls are optimistic about New Zealand's future.
