09 June 2009

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Getting New Zealand On The Road To Recovery

The 2009 Budget gets New Zealand on the road to recovery. It puts in place policies to ensure our economy emerges strongly from the recession and provides a platform for strong growth, higher incomes, and quality public services.

Its three main aims are to:

- Improve public services and help New Zealanders through the recession.
- Lift productivity and raise the country's international competitiveness.
- Take steps to keep government debt under control.

I'm really proud that despite the worst economic conditions since the 1930s, the Government is preserving entitlements such as National Superannuation, Working for Families, and welfare benefits.

At the same time, we are increasing spending on front-line public services, particularly in health, education, and justice, and meeting many of our election commitments.

We have also established the New Zealand Home Insulation Fund which will provide grants of up to $1800 for houses built before 2000 that need ceiling and under-floor insulation or a clean-heating device. More than 180,000 homes will have access to these grants regardless of household income.

Our second objective in the Budget is lifting productivity and raising New Zealand's international competitiveness.

We are boosting investment in infrastructure, improving the regulatory environment for businesses, lifting knowledge and skills, and shifting public sector resources from the back office to the front line.

The Budget's third objective is to take steps to keep government debt under control.

To do this, we have reduced the government's operating allowance for new spending in future budgets to a maximum of $1.1 billion. We have reluctantly delayed the personal income tax cuts that were scheduled for 2010 and 2011. And we have held off making full contributions to the Super Fund until the government runs an operating surplus big enough to fund those contributions.

This last move does not have any impact on New Zealand Superannuation entitlements. The government will maintain payments at a minimum of 66% of the average wage, and people will continue to be eligible for Super when they reach the age of 65.

In the mid 2020s, when demographic pressures begin to push up the total cost of Super, it's important that the government is in surplus, has a moderate level of debt, and is not burdened with high borrowing costs. That's the situation we are forecasting, thanks to the measures we have taken in this year's Budget.

Our challenge now is to focus on the economic agenda that can fulfil the aspirations of New Zealanders. This Budget is just the first part of that ongoing agenda. We have a plan, we know what we are going to do, and we are getting out there and doing it.

Read my full speech on the Budget - click here
Get more information about the Budget - click here

OUT AND ABOUT

I had a great time in Whitby last Wednesday, drinking Milo with the children and families of Discovery School, and reading bedtime stories.

On Thursday I was in Christchurch opening the Cancer Society's Daffodil House, which provides accommodation for patients who are getting cancer treatment. It's fantastic to open a facility that has come about with the generosity and support of so many people.

I'm looking forward to opening Fieldays at Mystery Creek tomorrow and catching up with people from across the agricultural industry. Later in the day I'm heading to Christchurch for the Prime Minister's South Island Forum. And on Thursday I'll be in Auckland as Minister of Tourism for the 2009 TRENZ Conference.

I hope to see some of you at these events.

Best wishes,

John Key
Prime Minister

You can follow me on Twitter here. www.twitter.com/johnkeypm

ENDS

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