The Government’s 2011 Budget will be released on Thursday 19 May. Highlights of the Budget 2011 Preview (19 May, 2.00pm NZT) include:
- Unlike last year’s tax reform-minded Budget, the focus this year will be back to cost control.
- A weaker than expected starting point for the economy, and the massive expense associated with the recovery and rebuild of Christchurch after two major earthquakes, will see the operating balance blow out to a record $16bn this year.
- The most significant policy change will be a zero net increase in operational spending allowances for next year. New spending plans will have to be funded through cuts elsewhere.
- The earthquake-related hit to the accounts will be heavily front-loaded, and will only slightly delay the projected return to surplus.
- The Government’s borrowing requirement and net debt ratio will be higher than projected in the 2010 Half Year Update, but should be sufficiently conservative to satisfy the credit rating agencies.
