Key stands by plans for 2014-15 Budget surplus

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Last updated 05:00 04/12/2012
John Key
Fairfax NZ
Prime Minister John Key

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The Government's plan to return to surplus by 2014-15 appears to be on a knife-edge as the Treasury prepares its final forecasts for the year.

Prime Minister John Key yesterday said it was important the numbers showed a return to surplus "within cooee" of the date the Government had set, to avoid a backlash from credit rating agencies.

"They are not unrealistic, but anyone that thinks we can just abandon getting back into surplus within cooee of the date that we have said . . . with no ramifications is misleading themselves," he said.

"We have high levels of private sector debt, they are conscious of our current account deficit and have a certain amount of patience."

He said he was "not uncomfortable" with the numbers he had seen ahead of Treasury's update on December 18.

However, he cautioned not to put too much weight on the final forecast.

"Whatever number they tell you at the end of this year, that will not be the number" that is finally achieved.

In the May Budget, Treasury forecast a slim surplus of just $197m in 2014-15.

But Mr Key said the numbers were on the right track, with deficits falling sharply in the last few years.

New Treasury advice to ministers, released yesterday, indicated the economy had slowed in the second half of the year but would rebound in the final three months of 2012 and into 2013.

September quarter retail sales and labour market data had been weaker than expected with unemployment rising from 6.8 per cent to 7.3 per cent. But Treasury said the underlying picture was not quite as weak as the headline results suggested.

"The slowdown should be temporary, with the December quarter likely to rebound slightly and indicators pointing to a further pickup in 2013."

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