Transcript Slide 1

Budget 2011
Building Our Future
Hon Bill English, Minister of Finance
Three Budgets: One plan
Budget 2009
• Helped New Zealanders through the recession
• Turned around forecasts of ever-rising debt
Budget 2010
• Built platform for growth on savings, investment
• The biggest tax reform in 25 years
Budget 2011
• Sets a faster path to surplus, repays debt
• Rebuilds Christchurch
• Builds faster growth, higher national savings
From record deficit to surplus
OBEGAL, $ billions
6
4
2
0
-2
-4
-6
-8
-10
-12
-14
-16
-18
Forecasts
2008
2009
2010
2011
Budget 2011
2012
2013
Earthquake costs
2014
2015
Progress over three Budgets …
OBEGAL, % of GDP
8
Forecasts
6
4
2
0
-2
-4
-6
-8
-10
2008
2010
2012
Before Budget 2009
2014
2016
Budget 2009
2018
2020
Budget 2010
2022
2024
Budget 2011
… keeps debt below 30% of GDP …
Net debt, % of GDP
70
Forecasts
60
50
40
30
20
10
0
2008
2010
2012
Before Budget 2009
2014
2016
Budget 2009
2018
2020
Budget 2010
2022
2024
Budget 2011
… and we help rebuild Christchurch
• Rebuilding Christchurch a priority of Budget 2011
• Govt costs $8.8b, including $3.3b for EQC, ACC
• $5.5b Canterbury Earthquake Recovery Fund
• Quake costs absorbed, back in surplus by 2015
Instrument
Costs
Funding
source
Canterbury Earthquake Recovery Fund EQC + ACC
$5.5 billion
$4.8 billion new funding
including from Canterbury
Earthquake Kiwi Bonds
$3.3 billion
$740 million
Reserves
from existing (levy funded)
funding
Economy rebounds after quake
Real GDP growth %
5
Forecasts
4
3
2
1
0
-1
-2
-3
Mar-08
Mar-09
Mar-10
Mar-11
Budget 2010
Mar-12
Mar-13
Budget 2011
Mar-14
Mar-15
More jobs, lower unemployment
Unemployment rate %
8
• Unemployment
falls below 5%
by 2012
• 170,000 new
jobs over the
next four years
Forecasts
7
6
5
4
3
2
M
1
-0
r
a
M
3
-0
r
a
M
5
-0
r
a
M
7
-0
r
a
M
9
-0
r
a
1
M
-1
r
a
3
M
-1
r
a
5
M
-1
r
a
Budget 2011 avoids over $10b of
borrowing by 2015
$5.6b through the operating allowance …
• Previous allowance out to 2015:
• Actual net spending to 2015:
• Savings in operating spending:
$4.4b
-$1.2b
$5.6b
… reducing the need for extra borrowing …
Budget 2011 avoids over $10b of
borrowing by 2015
… and $5-7b in mixed ownership model proceeds
• Means we can redeploy existing capital, rather
than always funding more from general revenue
• Funds around one-third of core investment, new
schools, hospitals, broadband etc
Average net borrowing falls to $100m a week in
2011/12, start repaying debt in 2014/15
KiwiSaver lifts real savings
Cumulative KiwiSaver contributions, $ billions
30
Forecasts
25
20
15
10
5
0
2008
2009
2010
Members
2011
2012
Employers
2013
2014
Government
2015
Making WFF sustainable
Working for Families costs, $ billions
Forecasts
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2001
2003
2005
2007
Budget 2011
2009
2011
Half Year Update 2010
2013
2015
A better public service …
Ensuring public agencies play their part
Getting better value for taxpayers
• Efficiency savings of $980m over three years:
• $650m from agencies meeting costs of
retirement savings schemes
• $330m from administration efficiency gains
… and more frontline services
Directing funding to frontline services
• $2.2b more for health – electives, disability
support, new mothers
• $1.4b more for schools and early childhood
Investing in key infrastructure
• $942m for ultra-fast broadband
• $250m invested in KiwiRail; $88m for Wellington
Metro rail network
• More investment in roads and electricity
Promoting savings and investment
Govt back to surplus, wider investment opportunities
• Mixed ownership model to proceed from 2012
With New Zealanders at the front of the queue
• Creates an Earthquake Kiwi Bond, inflation bond
• Establishes local government funding agency
• Resources the new Financial Markets Authority
Early signs of progress
Household debt to disposable income %
160
140
120
100
80
60
40
20
0
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
Platform for faster growth, jobs
Budget 2011 next steps in Govt programme:
 Sets a faster path back to surplus in 2014/15
Even with the costs of rebuilding Christchurch
Helps increase national savings
Large programmes sustainable, Government’s
books in order, national savings increase
Builds a strong platform for growth
Rebalancing economy, 170,000 new jobs
Budget 2011
Building Our Future
Hon Bill English, Minister of Finance