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News and Updates from Bill English

26 November 2014
Household savings rate positive for five years

New Zealand households have together saved more than they spent over the past five consecutive years – the first time this has happened since 1989-94, Finance Minister Bill English says.

The latest revised annual National Accounts (Income and Expenditure) compiled by Statistics New Zealand show aggregate household savings – which includes the impact of debt repayment - totalled $2.8 billion in the year ended March 2014.

This represents a positive savings rate of 2.1 per cent of household disposable income.

The revised figures show that before 2009 – the year after the National Government was first elected - the household savings rate had been negative in all but one year since 1995.

“This news is the latest in a series of results that show households are getting ahead and that the economy is steadily rebalancing towards higher savings and away from borrowing and consumption,” Mr English says.

“Combined with average hourly earnings growing more than twice as fast as inflation, a sustained period of historically low interest rates, falling unemployment and good economic growth, the household savings data adds to a picture of New Zealanders making sensible decisions to strengthen their own balance sheets.

“The Government, which has also kept tight control over its own spending during the same period, has made changes that have encouraged New Zealanders away from debt-funded consumption in favour of a more sustainable and secure position.

“Households have been nudged towards this by a combination of factors including the 2010 tax package which lowered taxes on income and savings and increased tax on consumption and property speculators.

“The Government has also pursued initiatives that have made investments more attractive, including the government share offer programme which  helped stimulate New Zealand’s capital markets. At the same time, we’ve tidied up the finance company sector to help protect depositors, and made KiwiSaver more affordable.  

“Many low-income households are still finding things tough . However, the overall picture supports a rebalancing of the economy away from the debt-fuelled consumer binge that occurred under the previous Labour government, to a growing culture of saving and investing.

“While this helps households get ahead, low inflation and restrained consumption contributes to government revenue being lower than it otherwise would be, again reinforcing the challenge of getting back to surplus.”

26 November 2014
Iwi members appointed to Whanau Ora group

Six iwi representatives have been appointed to the Whanau Ora Partnership Group Finance Minister Bill English and Minister for Whanau Ora Te Ururoa Flavell say.

“These iwi representatives are well-placed to contribute to the work of the group,” says Mr English.

The representatives, nominated by the Iwi Chairs Forum, are Raniera (Sonny) Tau, Naida Glavish, Rahui Papa, Sir Mark Solomon, Dr Hope Tupara, and Richard Steedman.

“We are delighted with the depth, wisdom, and iwi connections that these appointees bring,” says Mr Flavell.

The Whanau Ora Partnership Group is a forum of ministerial and iwi representatives. The group determines the Whanau Ora outcomes that Commissioning Agencies need to achieve and identifies opportunities that the Crown and iwi can contribute to, that support the aims and aspirations of whanau, hapu and iwi, in relation to Whanau Ora.

The Partnership Group consists of equal members of iwi leaders and ministers. The Minister for Whanau Ora Hon Te Ururoa Flavell will chair the group. He will be joined by five other ministers: Finance Minister Bill English, Education Minister Hekia Parata, Health Minister Jonathan Coleman, Social Development Minister Anne Tolley and Economic Development Minister Steven Joyce.

The group will develop strategies that ensure whanau and communities who can benefit from Whanau Ora, have that opportunity. It will hold its first meeting next month.

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20 November 2014
NZ performing well, return to surplus a challenge

New Zealand remains on track for solid economic growth, more jobs and rising incomes over the next few years, but falling dairy prices and low inflation will make returning to surplus this year challenging, Finance Minister Bill English says.

“Businesses and consumers are confident about the future, there’s a lot of activity in the manufacturing and service sectors, and companies are employing more people and paying higher wages,” he said in a speech to an ASB business breakfast in Auckland today.

“New Zealand is performing well in a world that remains uncertain. It was clear from the G20 finance ministers’ meeting in Brisbane last weekend that growth remains elusive in Europe and more uncertainty in China is being reflected in some sharply lower commodity prices.”

The Government’s annual Budget Policy Statement, which will be issued on 16 December along with Treasury’s Half-Year Economic and Fiscal Update, is being compiled in what are unusual times for global economies.

“Falls in global commodity prices such as oil, forestry and dairy, together with weak international consumer price inflation, are posing challenges for governments and central banks around the world,” Mr English said. “New Zealand is not immune to these global trends.

“This combination of lower commodity prices and low inflation means that the nominal or dollar value of New Zealand’s economic output will not grow as fast as previously expected. This will affect farm and company incomes and we expect this to flow into the Government’s books through lower revenue.

“On the other hand, the current economic outlook is positive for households. Low global inflation, a strong dollar and more jobs mean we are not seeing the cost of living increases that would usually go with the kind of real economic growth we’re experiencing right now.

“This means New Zealanders have more spending power as, on average, their incomes are rising a bit faster than the cost of living. Low inflation also means there is less pressure on the Reserve Bank to raise interest rates.”

The Government is continuing with its economic plan – through the Business Growth Agenda and other micro-economic reform initiatives – to build a stronger economy that supports more jobs and higher incomes beyond the peak of this economic cycle, Mr English said. This was reflected in a comprehensive growth strategy presented to the G20 summit last weekend.

“We’re also continuing to support the most vulnerable New Zealanders through better public services and support programmes focused on achieving better results.

“And we’re focused on controlling our spending and returning to surplus this year, as well as reducing net debt to below 20 per cent of GDP by 2020, so we can withstand the next downturn or natural disaster.”

The Treasury’s best assessment of the latest data and the impact on government revenue will be included in the Half-Year Update next month.

“The unusual current combination of economic circumstances is likely to have an impact on these updated forecasts,” Mr English said. “As we’ve said all along, returning to surplus this year will be a challenge.

“But we believe the strength of the economy and constrained government spending can deliver a surplus when the final accounts are published late next year.

“The Government has a track record of sticking to our spending plans to protect the most vulnerable and to provide certainty for public services. We won’t be changing that approach.

“The overall trend in the Government’s accounts is positive. The OBEGAL balance has improved from a deficit of 9.2 per cent of GDP in 2011 to a deficit of just over 1 per cent of GDP in 2014, and we’re on track to reduce net debt to below 20 per cent of GDP.”

07 November 2014
Economy growing but fiscal position challenging

The Crown accounts for the first three months of the current financial year are broadly consistent with forecasts, but at the same time highlight the challenge of returning to surplus, Finance Minister Bill English says.

For the three months ended September 30, the operating balance before gains and losses (OBEGAL) deficit was $725 million – $79 million more than forecast in Budget 2014.

Core Crown tax revenue was $73 million (or 0.5 per cent) higher than forecast. Although GST revenue was $175 million (4.1 per cent) below forecast it was offset by corporate tax coming in $135 million (7.1 per cent) higher than expected, and other individuals tax being $79 million (also 7.1 per cent) higher. At the same time, Core Crown expenses were $123 million (0.7 per cent) higher than forecast.

“The accounts illustrate what I’ve been saying recently,” Mr English says. “The economy is growing solidly and this is supporting more jobs, allowing wages to rise faster than inflation and keeping interest rates lower for longer.

“But we have an unusual situation with the nominal economy – which is what drives revenue to the Government - increasing more slowly. This is partly because falling dairy prices are impacting on nominal growth.

“While it’s good for New Zealand families to have low interest rates, low inflation and less debt-driven consumption, it makes the Government’s fiscal position more challenging.

“These accounts reflect only the first three months of the financial year, so uncertainty remains regarding the outlook for tax revenue for the rest of the financial year.

“What is clear is that the Government’s spending remains on track and focused on delivering better results. The fiscal outlook has improved markedly over the past six years and ongoing responsible management is required to ensure the improvements shown in the forecasts actually occur.

“In the meantime, what’s most important to New Zealanders is that we have continuing job growth, moderate wage rises, elevated levels of confidence, a steadily growing economy and a Government that’s committed to carefully managing its own spending,” Mr English says.

04 November 2014
Next step in social investment focus

The Government remains committed to its social investment approach to improve services for New Zealanders most in need, Finance Minister Bill English says.

“The Prime Minister has made clear that in this third term the Government will further focus on issues influencing children in material deprivation and hardship. Just as there are many and sometimes inter-related causes of hardship, there must also be multiple and sometimes inter-related strands to the solution. 

“The Better Public Services programme, reform of the social housing sector and the investment approach that we have developed to improve services for the people who need them most, are all part of the Government’s ongoing programme. 

“In another step, The Treasury will issue a Request for Information inviting submissions from people who work with vulnerable New Zealanders as well as others whose input might help us invest to get better results.”

The Request for Information will focus on:

  • Effective ways of identifying and engaging the children and families most at risk of poor education, criminal justice and employment outcomes.
  • How existing services or support could be improved to deliver better outcomes for the most at-risk children and their families.
  • Issues not currently being addressed that affect at-risk children and their families.
  • New interventions, services or arrangements that could deliver better outcomes.

This approach builds on initiatives like Whanau Ora, Children’s Teams and Social Sector Trials, which focus on the needs of individual citizens.

Information collected will be used to identify where existing government services can be improved, or where new localised or citizen-centred services can be trialled as part of Budget 2015. Initiatives could be funded through new spending or reprioritising existing expenditure.

The Request for Information will be available from Thursday on the Treasury website. www.treasury.govt.nz/budget/socialinvestment