John Key. Photo by Getty
Prime Minister John Key said the May 15 Budget would
continue to maintain discipline over Government spending and
said the prospect of large increase in spending "can be a
distraction'' in the public sector from solving problems.
"Instead of throwing money around we are actually addressing
the real causes of problems and we are having a great deal of
Mr Key also announced an expansion of New Zealand Trade and
Enterprise capacity in China, South America and the Middle
East in his major pre-budget speech today.
He re-affirmed that the Budget would post a small surplus -
it was forecast in December to be just $86 million - the
first since 2008 and that the new spending allowance would be
New Zealand Trade and Enterprise at present assists 500 New
Zealand companies trading overseas each year.
Mr Key said the increase in funding and personnel would
increase that to 700 companies.
NZTE would add seven new positions in greater China, three
new positions each in Brazil, Chile and Colombia and two new
positions in Saudi Arabia and United Arab Emirates..
"To become a wealthier country that afford higher incomes and
better public service, we have to boost our trade,'' he said
in a speech to the North Harbour Club at the North Harbour
The new funding would be $69 million over the next four years
and $14 million from reprioritising in other areas, which he
did not specify.
The boost in China follows a similar boost of seven staff in
Ministry of Foreign Affairs and Trade staffing and five
Primary Industries positions in China announced by Mr Key in
China last month.
Mr Key said anything more than a modest increase in spending
would mean higher interest rates than would otherwise have
been the case.
His Government was prepared to invest in programmes that had
a pay-off wither socially or economically.
"We need to get on and reduce our debt instead of using
taxpayers' money in a series of election bribes, which is the
The Government's approach was to focus on what was really
driving social outcomes like crime, welfare dependency and
under-achievement at school and address the underlying
"That approach is delivering real results without breaking
the bank. In fact over the longer term it saves money.
"We've found that the possibility of more spending can be a
distraction from a growing focus in the public sector on
solving complex problems rather than throwing money at
The new approach had already reduced reoffending by 12.6 per
cent, which was half way to the target of a 25 per cent drop.
That has meant 2300 fewer offenders and 9300 fewer victims of
In welfare, the Government had focused on getting people off
benefits and into work because that was the best way to lift
people out of poverty.
Government spending as a proportion of GDP had been declining
at the same time since the Government changed in 2008.
In 2008-2009, Government spending was 34.5 per cent of GDP.
In the coming year it was forecast to be 30.6 per cent before
dipping under 30 per cent and staying there.
That was important when the economy was an upswing because
on-going spending restraint by the Government helped to
dampen the interest rate cycles.
Lower interest rates kept the exchange rate lower which was
important for the overall competitiveness of the economy.
- By Audrey Young of the New Zealand Herald