John Key hints tax cuts possible without risk to debt-repayment
When the Government opens its books next week, Prime Minister John Key says he is sure he won't be the only one singing a debt repayment and tax-cut medley.
Finance Minister Bill English is set to release Treasury's Half-Yearly Economic and Fiscal Update (HYEFU) next week, although Prime Minister John Key has offered some big hints over how much flexibility the Government will have toward meeting its priorities.
Speaking to media at his weekly post-Cabinet press conference, Key said he was confident the Government would have room for a range of initiatives.
English briefed his Cabinet colleagues on New Zealand's financial health on Monday.
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"Those numbers include both a write-off of expenditure for the earthquake. Not the full cost of the earthquake, but what we think we're going to take to our bottom line straight away," Key said.
"They'll also include a number of other big initiatives that we've got, that are taking place.
"There's a lot of different moving factors here, but what you will see over a four-year period of time, is a surplus that there'll be lots of debate, over what people think those surpluses should be spent on."
Asked if the Government could "do it all" - social spending, tax cuts and paying down debt - Key said: "I think when you see the numbers next week that's what you'll think as well".
Key was reluctant to say how much the earthquake write-off would come to, but said earlier estimates of $2b to $3b were broadly correct.
In a recent TVNZ Colmar Brunton poll, 17 per cent of respondents supported the idea of the Government surplus being used to support tax cuts.
But Key did not buy the number that so few people expected tax cuts.
"I think it's when you ask a very specific question like that, particularly at a time where you've had an earthquake as we did - then you're going to see the sort of response that you got," he said.
"When you see the HYEFU numbers, then what you'll see is the budget surpluses start hockey-sticking up, and they start getting quite big.
"And I'm telling you now, you might be having this debate today, but in a year or two from now the argument will be 'why is the Government, when debt is well and truly on track for its target of GDP to be below 20 per cent, why is the Government building bigger and bigger surpluses?'"
Key was confident the figures would move past a discussion that focused on "health and education versus a tax and family package".