Key warns against loosening the purse strings

HAMISH RUTHERFORD
Last updated 05:00 01/04/2014

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The Government is seeking to curb expectations for new spending as the economy grows, warning that the $1 billion of new spending in the Budget is "the new normal".

Prime Minister John Key will deliver a speech in Auckland tomorrow outlining the approach being taken in the preparation for Finance Minister Bill English's sixth Budget, due on May 15.

With unemployment declining and the economy expected to grow 3 per cent in 2014, the Government is poised to forecast its first fiscal surplus in 2014-15 since taking office in 2008, albeit only about $100 million.

From next year surpluses are expected to increase into the billions, but Key warned against expectations that the purse strings will start to loosen, this year, or even in future Budgets.

"If you're looking for us to have a kind of massive lolly scramble either on Budget day or going into the election, you're looking at the wrong political party," he said.

"If you're going to have the argument that in the bad times, like a Christchurch earthquake or a recession, the Government should borrow money to stimulate or support the economy or the people, then by definition in the good times, you've got to prepare for another rainy day."

Funds would be focused on cutting debt - now at more than $60b - as well as potentially on a resumption of funds into the New Zealand Superannuation Fund.

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- The Dominion Post

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