Hon Bill English MP

Greater certainty for covered bond investors

nospam@example.com (Admin) — Thu, 10 May 2012 10:34:38 +1200

A new legislative framework for the issuance of covered bonds by New Zealand registered banks will provide greater clarity for investors and depositors, Finance Minister Bill English says.

The Reserve Bank of New Zealand (Covered Bonds) Amendment Bill, introduced to Parliament today, provides for the Reserve Bank to maintain a register of banks’ covered bond programmes and provides greater legal certainty for investors in the unlikely event of a bank defaulting.

Covered bonds are debt securities where the bond holder is an unsecured creditor of the issuing bank, but holds a secured interest in a separate pool of assets called the ‘cover pool’.

“Covered bonds can have significant benefits for registered banks as a long-term source of relatively stable finance. They also allow banks to diversify their funding by providing access to new investors and to a funding market that has been very resilient, even during the global financial crisis,” Mr English says.

“The register will offer greater clarity for investors and depositors as to which assets are set aside for the benefit of covered bond holders.”

The Reserve Bank already imposes a limit on issuance of covered bonds, which balances the benefits of covered bond issuance against the impact on unsecured creditors.

“Providing a legislative framework will give investors greater legal certainty as to the treatment of cover pool assets in the unlikely event that the issuing bank defaults. Such frameworks already exist in most other countries with covered bond markets,” Mr English says.

It is intended the new framework will come into effect this year, with a transition period to enable the registration of existing covered bonds programmes.

Finance Minister welcomes income study

nospam@example.com (Admin) — Wed, 09 May 2012 17:56:46 +1200

Finance Minister Bill English has welcomed a report from University of Otago researchers, which analyses changes in income and deprivation between 2002 and 2009.

“The report confirms there was substantial income mobility over the period, with many New Zealanders moving in and out of different income bands.

“For example, only a quarter of those whose income was assessed to be in the bottom 10 per cent of incomes in 2002 were still in that position in 2009. That’s comparable to other countries such as Australia and the United Kingdom,” Mr English says.

This relatively high level of income mobility, particularly for lower income groups, confirms the need for careful targeting of government support and incentives.

The report also shows that only a small proportion of New Zealanders spend long periods on low incomes and in deprivation.

“The Government will continue with its programmes to help more New Zealanders to take advantage of opportunities to move into work, education and skills training,” Mr English says.

The research report, by Dr Kristie Carter and Dr Fiona Imlach Gunasekara of the Public Health Department at the University of Otago, examined longitudinal survey data collected in Statistics New Zealand’s annual Survey of Family, Income and Employment (SoFIE).

Disciplined Budget will rein in deficit

nospam@example.com (Admin) — Tue, 08 May 2012 10:25:54 +1200

The Budget later this month will confirm the path back to surplus in 2014/15, despite lower than forecast tax revenue in the Government financial statements in the nine months to 31 March, Finance Minister Bill English says.

Core Crown tax revenue was $1.6 billion below the Pre-Election Economic and Fiscal Update forecast and overall revenue was lower by $1.8 billion. However this was offset by lower core Crown expenses of about $1.8 billion.

The operating balance before gains and losses was about $800 million below forecast – mostly due to EQC recognising costs from the 23 December earthquake.

“These statements are consistent with preliminary Budget forecasts which show a $1 billion deterioration since the Budget Policy Statement in February,” Mr English says.

“The Government is committed to returning to surplus in 2014/15 and the Budget will confirm that. But we shouldn’t underestimate the challenge – returning to surplus will require tight spending control for the foreseeable future.

“Returning to surplus is important because New Zealand is one of the most indebted countries in the world as measured by our net international investment position.

“We need to start rebuilding a buffer for when the next global crisis comes. Surpluses give us choices we simply don’t have while we’re running deficits.

“But while we’re making some challenging decisions to get back to surplus, we will continue with the same balanced approach we’ve adopted for the previous three Budgets.

“We’re keeping up entitlements to welfare and superannuation and we’ll be investing more in health, education and law and order,” Mr English says.

Budget 2012 will confirm surplus in 2014/15

nospam@example.com (Admin) — Thu, 26 Apr 2012 13:14:43 +1200

Budget 2012 will set out balanced decisions to ensure the Government remains on track to surplus in 2014/15, Finance Minister Bill English confirmed today.

In particular, it will address a $1 billion deterioration in the forecast operating balance before gains and losses in 2014/15 between the Budget Policy Statement in February and preliminary Budget estimates.

“It’s important that we return to surplus because New Zealand is one of the most indebted countries in the world as measured by our net international investment position,” Mr English told the Wellington Employers’ Chamber of Commerce today.

“We need to start rebuilding a buffer for when the next global crisis comes along. Surpluses give us choices we simply don’t have while we’re running deficits.”

Returning to surplus by 2014/15 is a significant challenge, requiring tight control over spending for the foreseeable future, Mr English said.

“The scale of the challenge was again highlighted in preliminary Budget estimates ministers received in recent weeks.

“They revealed a $1 billion deterioration in preliminary forecasts of the operating balance before gains and losses in 2014/15, compared to the Budget Policy Statement in February. In other words, the preliminary Budget estimates showed a $640 million deficit in 2014/15, compared to the $370 million surplus predicted in the BPS.”

This reflected a number of factors, such as the impact of lower global growth on short-term, New Zealand growth forecasts. This in turn flowed into lower government revenue expectations.

In addition, New Zealand Superannuation Fund revenue and State Owned Enterprises profits had been revised downwards, and finance costs and earthquake costs were revised upwards.

“But ministers remain focused on staying on track to surplus in 2014/15 for all the reasons I’ve outlined,” Mr English said. “They are making decisions to achieve that. As a country, we can’t afford to spend money we don’t have.”

These decisions include:
• Running what will be very close to a zero Budget, meaning little new net government spending in this Budget out to 2014/15.
• Continuing to reprioritise existing spending into higher priority areas to ensure better public services.
• Considering the appropriate level of future operating allowances, while ensuring we can deliver better services.
• Continuing with revenue-enhancing measures signalled in Budget 2011such as fairer tax treatment of employee benefits, new rules for mixed-use assets such as holiday homes, and a new approach for livestock valuation.
• Proceeding with $1 billion of public sector savings over the next three years, as announced in Budget 2011 to ensure chief executives had time to plan. Those savings begin on 1 July this year.

The Budget will also propose changes in the Public Finance Act so there are more checks and balances on ministers’ spending decisions and their long-term effects.

This includes a proposed spending limit to restrict spending increases to population growth and inflation, as set out in the National-ACT confidence and supply agreement.

“So you can see that this Government is serious about getting back to surplus by 2014/15,” Mr English said.

“But I want to stress that while we’re making some challenging decisions to get back to surplus, we will continue with the same balanced approach we’ve adopted for the previous three Budgets.

“We’re keeping up entitlements to welfare and superannuation, and continuing with large programmes like Working for Families and interest-free student loans. We will invest more in health and education. We promised New Zealanders we would do that.

“We’re investing money up front to support New Zealanders out of welfare. We’re also remaining strong on law and order and demanding better, more innovative, public services. This Government has a strong track record in these areas.”

Speech to the Wellington Employers’ Chamber of Commerce

nospam@example.com (Admin) — Thu, 26 Apr 2012 13:13:55 +1200

Good afternoon. Thank you to the Wellington Employers’ Chamber of Commerce for inviting me back to speak to you again this year – it’s a pleasure to be here.

Our ministers value opportunities like this to share ideas about how we can meet the challenges we face as a nation - and how we can grasp the many opportunities we have.

So I look forward to your comments and questions at the end of this session.

In exactly four weeks, the National-led Government will deliver its fourth Budget. It will set out the next steps in our economic programme, which you will be familiar with by now.

Over the past three-and-a-half years, we’ve successfully steered New Zealand through the domestic and global recessions we inherited in 2008.

We continue to stand beside the people of Canterbury after the series of devastating earthquakes.

We’re making good progress in putting the economy on a more productive and competitive footing. And we’ve made early progress dealing with the long-term, structural challenges facing many countries around the world.
Continue reading "Speech to the Wellington Employers’ Chamber of Commerce"

Government to strengthen fiscal responsibility

nospam@example.com (Admin) — Thu, 26 Apr 2012 13:13:19 +1200

The Government intends to strengthen the Public Finance Act so there are more checks and balances on ministers’ spending decisions and their long-term effects, Finance Minister Bill English says.

“The fiscal responsibility provisions of the Public Finance Act, which include a high degree of public reporting and transparency, have served New Zealand well in terms of maintaining a focus on low debt since 1994,” Mr English says.

“However, the global recession and events in the years immediately preceding it point to the need for a broader focus.

“In times of surplus, governments come under pressure to increase spending, which can put extra pressure on the economy, leading to higher inflation, higher interest rates and a higher exchange rate. This is bad for exports and jobs.

“The Government is proposing introducing some additional principles into Part 2 of the Public Finance Act that ministers would have to take into account when setting fiscal policy.

“The proposed changes are designed to ensure greater transparency around how government decisions affect the wider economy and future generations.”

The proposed changes would require governments to:
• Consider the impact of their fiscal strategy on the broader economy, in particular interest rates and exchange rates.
• Set out their priorities for revenue, spending and the balance sheet, rather than focus narrowly on debt as is currently the case.
• Take into account the impact of fiscal policy decisions on future generations
• Report on the successes and failures of past fiscal policy.

“We are also proposing to add a spending limit based on the rate of growth in inflation and population as a new principle of responsible fiscal management, as set out in the National-ACT Confidence and Supply Agreement.”

It would exclude spending on natural disasters, finance charges, the unemployment benefit and asset impairments, as they are either outside the Government’s control or they help stabilise the economy in a downturn.

“Under the proposal, if a government decided to temporarily exceed the limit they would need to clearly explain the reasons and outline how they intended to ensure future expenses remained within the limit.”

The Government intends to consult other political parties on the proposed changes, which would be included in a Bill to be introduced around the middle of the year.

“Naturally we don’t expect agreement on everything, but the broader the political support for these changes the better,” Mr English says.

Govt receives international freight report

nospam@example.com (Admin) — Tue, 24 Apr 2012 11:36:04 +1200

The Government has received the Productivity Commission's final report on international freight services and will provide a thorough response once it has considered it in detail, Finance Minister Bill English says.

“International freight issues are vitally important to New Zealand as a nation of exporters, located a long way from major world markets," Mr English says.

“Increasing our export competitiveness is a critical part of achieving better productivity growth and ensuring New Zealanders maintain and increase their standard of living.

“The Government will look at the Productivity Commission's recommendations and carefully consider its response over the coming months," Mr English says.

The report, which was tabled today, looks at the effectiveness and efficiency of the existing infrastructure and regulatory regimes for international freight transport services.

It is available at www.productivity.govt.nz/final-report/1492

Australian investment and jobs good for NZ

nospam@example.com (Admin) — Thu, 19 Apr 2012 12:16:31 +1200

The increasing number of Australian companies investing and creating jobs in New Zealand is good for the economy and will help increase incomes, Finance Minister Bill English says.

“For the first time in quite a few years, Australian businesses are seeing competitive opportunities in New Zealand,” he says. “This reflects a number of issues, ranging from the exchange rate, lower business costs, an improving regulatory environment and the positive direction of economic policy.

“That was conveyed to the New Zealand team of ministers and officials at the Australian New Zealand Leadership Forum in Sydney last week, where business leaders said they were encouraged by New Zealand’s economic policy direction.”

Over the past three years, the Government has implemented a wide-ranging economic programme to make New Zealand more competitive.

This includes:

The Budget 2010 tax package which increased taxes on consumption and property speculation, and reduced taxes on work, companies and saving.
Improvements to regulation – for example resource management laws, building laws and industrial relations laws.
The Government’s multi-billion dollar infrastructure programme, in rail, roads, electricity transmission and ultra-fast broadband, to make the economy more productive.
A focus on changing the incentives around welfare and work.
Reducing government-imposed costs on business – for example, ACC levies on employers and the self-employed will fall by 22 per cent this year, reducing total costs to business each year by about $250 million.

“This is a long-term programme that will continue over the next few years to improve New Zealand’s competitiveness,” Mr English says.

“We need to encourage companies to invest, and create jobs, including from countries like Australia. This investment needs to come from businesses because the Government simply cannot afford to borrow and spend at the rate of the past decade.

“When capital is invested and management skills improve, New Zealand companies can sell their products for higher prices in overseas markets. It’s a recipe for higher wages, more exports and a faster-growing Kiwi economy.

“By contrast Labour continues to promote its old and unpopular policies that would add significant costs and taxes for businesses, and send the Government deeper into debt. That’s simply a recipe for job losses, higher interest rates and economic stagnation,” Mr English says.

Video briefing on housing affordability

nospam@example.com (Admin) — Wed, 18 Apr 2012 11:27:00 +1200

The housing market is picking up, which presents a challenge to Government policy makers concerned with affordable housing. Finance Minister Bill English discusses the issues involved in improving housing affordability.

More spending, borrowing – when will Labour learn?

nospam@example.com (Admin) — Mon, 16 Apr 2012 14:24:09 +1200

Labour continues to make expensive spending promises it could not afford without borrowing hundreds of millions of dollars more from overseas lenders, Finance Minister Bill English says.

“In the past week, it has proposed doubling paid parental leave entitlements, which would cost taxpayers another $150 million a year.

“And today, Labour’s leader confirms he backs research and development tax credits, which would cost at least $300 million a year. He claims this could be paid for from a new capital gains tax, but that’s not possible as Labour already concedes this would raise little extra revenue in its first few years.

“This from a leader who says he will be thrifty with taxpayers’ money, but in reality wants to spend more, borrow more and tax more.

“Together, these two Labour promises alone would amount to almost $2 billion of more debt over a four-year forecast period. Labour has clearly learned nothing from its past extravagance. Less than five months since the election, it is already going back to its bad old habits.

“New Zealanders and businesses are being careful with their own money, prioritising their spending and getting on top of debt. They expect nothing less of the Government. We need only look to many other countries to see the dire consequences of governments spending and borrowing too much.

“This Government does not want that for New Zealand. That’s why we’re focused on getting back to surplus by 2014/15, which will provide us with more choices such as repaying debt, delivering better results from public services and building a more competitive economy based on higher savings and less debt.

“It’s time Labour was honest with New Zealanders about precisely how it will pay for its spending promises,” Mr English says.

Chinese senior leader to visit New Zealand

nospam@example.com (Admin) — Fri, 13 Apr 2012 11:45:44 +1200

The fourth-ranked Chinese leader, Jia Qinglin, will arrive in New Zealand on Sunday for a four day visit to celebrate the 40th anniversary of diplomatic relations between the two countries.

Chairman Jia, who will be hosted in New Zealand by Acting Prime Minister Bill English, is chairman of the Chinese People’s Political Consultative Conference.

In addition to discussing bilateral issues in meetings with Mr English and other ministers, Chairman Jia will make a courtesy call on the Governor-General, will meet the Speaker, Dr the Rt Hon Lockwood Smith, give a 40th anniversary speech, undertake business related calls, and visit Christchurch and Queenstown.

"We are continuing to develop the political and economic relationship between China and New Zealand," says Mr English.

Foreign Affairs Minister Murray McCully has visited this year and Trade Minister Tim Groser has led a trade mission to China.

"The Government’s commitment to advance this relationship in a strategic way is clear in the NZ Inc China Strategy launched by the Prime Minister in February.

"The Government is committed to building the political, trade, education, tourism and cultural links with China that are important to New Zealand’s future prosperity."

New Zealand was the first developed country to negotiate a Free Trade Agreement with China, and exports to China have tripled since the agreement came into force in 2008.

Vietnamese deputy leader to visit

nospam@example.com (Admin) — Fri, 13 Apr 2012 11:28:08 +1200

Vietnam Deputy Prime Minister Nguyen Xuan Phuc will visit New Zealand for bilateral and business meetings over the next few days.

Mr Phuc, who arrives in New Zealand on Saturday, is to meet with the Governor General, Lt Gen The Rt Hon Sir Jerry Mateparae, Acting Prime Minister Bill English, Justice Minister Judith Collins, Education Minister Hekia Parata, Attorney General Chris Finlayson, and Foreign Minister Murray McCully.

"This visit is a valuable opportunity to discuss two-way trade, education and other opportunities for further cooperation between our two countries," says Mr English.

Vietnam is a member of ASEAN (Association of Southeast Asian Nations), which is New Zealand’s fourth-largest trading partner – accounting for 10 per cent of New Zealand’s exports and 16 per cent of our imports.

"New Zealand enjoys a strong and growing relationship with Vietnam. I look forward to comparing experiences on domestic issues, such as governance and economic reforms, as well as regional issues."

This is the first visit to New Zealand by Mr Phuc, who is one of four deputy prime ministers appointed in Vietnam for a five-year term in 2011. He is accompanied by a delegation of ministers and senior officials.

Trade, investment focus of Leadership Forum

nospam@example.com (Admin) — Wed, 11 Apr 2012 16:17:49 +1200

Acting Prime Minister Bill English will lead New Zealand’s ministerial delegation to the annual Australian New Zealand Leadership Forum in Sydney, which starts tomorrow.

He will be accompanied by Economic Development Minister Steven Joyce, Foreign Affairs Minister Murray McCully, Trade Minister Tim Groser and Commerce Minister Craig Foss.

The eighth Forum, which brings together senior politicians and business leaders from both countries, starts tomorrow night and concludes on Friday.

“The theme of this year’s Forum is ‘Australia and New Zealand – together in the Indo Pacific century’,” Mr English says. “Along with other ministers, I’m particularly keen to discuss how we can work together under CER to develop trade and investment markets in third countries.

“With the 30th anniversary of CER coming up next year, it’s important that we work together to take our already close relationship further on important issues such as trans-Tasman investment.

“Our two productivity commissions are working on their first joint study, looking at the impacts and benefits of further economic integration. This is a valuable opportunity to shape the next steps in our relationship and consider how to take advantage of the expanding opportunities in our wider region.”

The Forum will consider recommendations on freeing up capital flows and investment – including through mutual recognition of imputation credits - streamlining trans-Tasman travel, and promoting Pacific development.

While in Sydney, Mr English will also speak at an Infrastructure Partnerships Australia function tomorrow, and the other ministers will hold meetings with political and business leaders.

Govt receives housing affordability report

nospam@example.com (Admin) — Wed, 11 Apr 2012 10:44:51 +1200

The Government has received the Productivity Commission's final report on housing affordability and will provide a thorough response once it has considered it in detail, Finance Minister Bill English says.

"Housing affordability is an important issue for New Zealand families and our economy," Mr English says.

"New Zealand experienced a sharp rise in house prices over the past decade, resulting in declines in housing affordability and home-ownership rates and large increases in household debt.

"Rising prices made it harder for families to climb the first rung on the housing ladder and the accumulation of debt left the New Zealand economy more vulnerable to external shocks.

"These imbalances also create further pressure on demand for social housing and accommodation subsidies.

"The Government welcomes the commission's thoughtful contribution on how to reduce pressure on housing prices and on more effective government support for people who struggle in the housing market.

"The Government will look at the Productivity Commission's recommendations and carefully consider its response over the coming months," Mr English says.

The report, which was tabled today, looks at several issues affecting housing affordability, including urban planning, regulation, industry performance and taxation.

It is available at www.productivity.govt.nz/final-report/1468

Acting PM pays tribute to Sir Peter Tapsell

nospam@example.com (Admin) — Sat, 07 Apr 2012 12:35:33 +1200

Acting Prime Minister Bill English has paid tribute to Sir Peter Tapsell, who passed away in Ruatoria on Thursday night.

“I was saddened to learn of Sir Peter’s death and my thoughts are with his family at this time,” Mr English said.

“As the first Maori Speaker of Parliament in 1993, Sir Peter’s considered and dignified manner was a positive influence on a tense Parliament preparing for the first MMP election.

“He was respected by MPs across the political spectrum for his independent, thoughtful and direct style.

“Sir Peter was also highly active in many Maori and medical organisations and charities.”

He was a member of Parliament from 1981 to 1996 and elected Speaker of Parliament from 1993 to 1996 - the first member of an opposition party to serve in the role. He had previously been a minister across a range of portfolios, including internal affairs, arts, police and defence.

“Sir Peter will be remembered for his wide and varied contributions to New Zealand, which extended well beyond politics,” Mr English said.