By Alex Tarrant
Prime Minister John Key has poured cold water on the prospect of tax cuts for term deposit savings, saying it would be too costly in the current fiscal environment.
Meanwhile, Key also expressed confidence in Treasury's forecasts of strong wage and jobs growth to be included in the Budget tomorrow, and said the government would not be making KiwiSaver membership compulsory.
Finance Minister Bill English will release the National-led government's third budget at 2pm on Thursday which will show no additional spending from last year and cuts in areas other than Health, Education and Justice. The government has signalled its desire to cut the size of government as a proportion of the economy and control spending in order to return to surplus and begin paying down debt.
The budget is expected to show a deficit for the current financial year to June 30 of up to NZ$17 billion. Key has indicated the budget would show a track for returning to surplus before 2016/17 and that net government debt would peak below 34%.
'No savings tax cuts'
Asked by media today whether the Budget would lower taxes on savings, as recommended by the government-appointed Savings Working Group earlier this year as an incentive to drive investment away from property, Key said it would not.
“Literally [because of] fiscal cost. One of the real issues, as that Savings Working Group recommended, was that [government shouldn’t] tax savings as high. Now, long-term that might be a great thing to do, but we just simply can’t afford it tomorrow,” Key said.
Finance Minister Bill English yesterday said the government had not looked at the option of indexing savings taxes to compensate for inflation as the recommendation from the Savings Working Group was "too complex".
'Forecasts will hold up'
Meanwhile Key defended Treasury's forecasts to be included in the Budget tomorrow, which he said would show strong growth in employment in coming years, and wage growth that would "well and truly outstrip inflation".
It had been difficult for anyone forecasting recently, Key said. See Bernard Hickey's opinion piece on being sceptical about strong growth forecasts.
“Overall, there’s always the element they can get things wrong, there’s always the element of surprise," he said.
“But overall, if you have a look at the basis for their growth [forecasts], which is a number of different factors – stronger global growth, lower interest rates, higher commodity prices, stronger trade in this part of the world, in our case the Rugby World Cup, the rebuild of Christchurch – they’re all very solid things you can actually point to," Key said.
“So I think on balance it’s about right."
Asked whether there was a danger of jobs growth being unsustainable once the Rugby Worrld Cup ended, and as the Christchurch rebuild tapered out, Key replied:
“I think we’ve got a very different international environment. Global growth is returning, interest rates – they’re looking like they’ll stay low for quite a period of time – so yes I do think that growth will be there but in the end that’s in the hands of professionals like Treasury and proof of the pudding will be in the eating.”
“The government policies tomorrow will show we’ve done the right thing. In the three years in office, we’ve reformed the tax system, we’ve reformed the RMA, we’ve reduced the size of government, we’ve made it easier to do business in New Zealand, we’ve liberated Labour laws," Key said.
"All of those things help provide a platform for stronger growth,” he said.
KiwiSaver won't be compulsory
Meanwhile Key said the government would not be making KiwiSaver compulsory.
Currently workers are enrolled in KiwiSaver if they enter a new job, although people still in jobs from before the scheme began have to choose to opt in to KiwiSaver.
The Savings Working Group had recommended a 'soft' compulsion option where people were automatically enrolled at either a certain age or when they first entered employment, but had the option to opt out.
20 Comments
Dream on!! As if anyone can predict what is going to happen in the next 30-60 days with forecasts of S&P 500 at 400 from 1500, China over heating and bursting or China doing OK and John Key saying its all right, trust me!! "Yeah right" I say!
If we had some interviewers who actually prepared for an indepth interview where airy assertions were properly challenged (both to the Nats and Labour) we might discover just how naked our situation really was/is. Then the issue of do we trust a particular group to lead us becomes more centre stage.
If the reporting tomorrow is standard regurgitation of press releases then we are truly stuffed as the sheeple can only vote by instinct or total self interest as percieved from the unsubstantiated promises.
What happened to the Simon Walker type interviewers of the past? Even McPhail and Gadsby used to show the politicians for what they were.
It's all matey matey between the pollies and the journalists these days.
The average NZder hasnt got a clue wihat is going on.
We are just going to go further and further down the drain hole.
We truly are stuffed.
Interviewers and journalists do not exist. As with teachers, doctors and university educated individuals etc etc they are no more than repeaters.
The official line is aways repeated even if a lie that way over time it becomes a truth for the heard, and furthers others agenda's...
Financial terrorist John Key has poured cold water on the prospect of tax cuts for term deposit savings, saying it would be too costly in the current fiscal environment.
Saving up for retirement...Double speak mumbo jumbo.
Whats to expensive is 120 dead beats and there army of red tape morons working for overseas elites, banking interests and corporates...
All these political people are a waste of your time, better get a grasp on that. Key English and the rest, serve others in the globalist agenda, not you!
The promise of growth is relative to Australia, Japan and China keeping up with their momentum but the truth is that we are seeing several problems popping up in all these countries, so it is all wishful thinking... Unless Mr Key sees NZ as the engine that is going to lead the other three into growth........................... well everything is possible
Welcome to the downside of Clark's boondoggle boom time...you had your splurging excess now enjoy the misery of paying off the debt..if you ever can. There will be no "recovery" as suggested because too many borrowed too much from the banks. The pollies in power got there by promising to keep slicing the pork for the dummies and now the dummies are demanding a magic show where with a wave of the wand the wombles in the Beehive can make the debts go away.
Well they friggin can't see.....get the message?
On we go with the only tool at hand... endless ongoing debasement of the currency until the Chocolate Fish costs $10 each. Savers getting shafted if they opt to save in the bank accounts that pay only the rate of inflation..because the IRD will take tax off that fool.
Put it in Kiwisaver and feed the fund managers family why don't you.
Post November the National dominated govt will have to cut and cut and cut just as they are doing in the UK....those who thought the benefit pork would never end are in for a shock. The downgrade is more likely than not. Rates are more likely to rise than not. Mortgagee sales are more likely to rise than not. Sir Humphrey is more likely to get a fat pay rise than not.
Suck on that.
Wolly - teachers, as with reporters, should ascertain the truth, without pre-prejudice.
Whoever Seraphial is, they are absolutely correct.
When I first posted here, I thought you were on to it - at the time, my son asked me what was a safe way to keep his savings, and I said "buy a shipping container, and fill it with copper".
Why" IIt's a finite resource (the gaussian curve to depletion applies, regardless of URR) and it does a lot that plastics now do. Regardless of fiscal collapse, beyong the limits to growth, it will be more and more needed, therefore more and more valuable, whether it be $ or barter.
I'd assumed you were 'there' .
But you weren't, eh. Not by a country mile. The one where you're not allowed to park-up anymore.
You bought the lie. That's the truth of it.
Bit early to hit the plonk PDK....I flogged my copper for a fat gain and bought property for a huge discount...when the commodities turn pear shaped as they will, I'll buy copper again...
The truth as you put it is what believers say it is for them alone. I'll park up where I bleeding well want to.
Wolly -
Then you're part of the problem.
All wealth is underwritten by something real, at the end of the day. It's a proxy for a future purchase.
Your activities, just like Key's were, are parasitic. For every win you and he may have, someone else has to lose.
I guess that's where we differ. I have to do something useful, or make something useful, before I can accept renumeration. Your actions, on the other hand, actually contributed - directly - to the global fiscal meltdown.
There is actually no difference between your expectation that you can buy something tangible with the 'returns' on your unproductive gambling, and the derivative traders.
I guess we all sleep with our consciences.
You are thick with the sanctimonious claptrap today PDK....upsets you that I should make a gain and yet you say you told your kin to buy copper by the container load.....why don't you give it a rest...or take up bible bashing...
"All wealth is underwritten by something real"........what a load of crap....oh wait, crap is real....therefore it must contain wealth.....doh
It's what a person believes it to be PDK.....when you're an old fart, you will value time as you never did and throw away the money as worthless rubbish....when the doctor tells you the tumor is still there...you will value stuff you previously thought was worthless.....
Ask the head of the IMF what he now considers wealth to be!
Chuckle.
There we agree - 110$
I got the 'time' thing when very young. Always worked to live, rather than live to work. Interestingly, I've ended up in better shape than many contemporaries who kept their noses to the grindstone - it's not what you earn, it's what you don't spend.
Seriously, though, what happens to your 'wealth' when we re-visit 2008 (as we both agree is likely)?
It's presumably just a series of '1's and '0's, held in a bank or broking-house somewhere. You sure it will still be transmutable to something with which you can purchase groceries?
Cut Govt spending down to only absolutely necessary public needs. Cut taxes accordingly. Downsize the state "employment" sector. Remove state handouts and thus promote productivity and personal responsibility. THEN earnings and living standards will start improving; THEN housing will become "affordable".
It is a little bit like saying Wales is winning the RWC – stupid !.
New Zealand's government accounts could be back in surplus by March 2014, a year earlier than forecast, says the ANZ Bank in its outlook for tomorrow's unusually austere election year Budget.
http://www.nzherald.co.nz/budget-2011/news/article.cfm?c_id=1503063&objectid=10726391
Worldwide political, economic, social and environmental problems plus the consequences of Climate Change are far to big and complex to make such predictions.
The U.S. has suffered five billion dollars in weather related damage in 2011 so far - the highest ever recorded for a half year.
Beside radiation leaks into the atmosphere forcing about 50,000 families near the plant to evacuate, more than 10 million litres (2.6 million gallons) of contaminated water have leaked or been released into the sea.
Millions of litres of radiated water have also filled basements and trenches at the station from leaking reactor vessels and piping.
http://www.bloomberg.com/news/2011-05-18/tepco-misleading-public-over-nuclear-crisis.html
Where does all the money to pay come from ?
Where does all the money to pay come from ?
Its created from nothing in the ether and put on to balance sheet as credit which is really debt for a fee released at a discount window for the club members at a fee to mates who charge fees for more nothing on the expectation that future growth will service the interest...etc etc...econobabble blah blah...backed by oil....blah blah blah .... underpined by GDP ...blah blah...with a hedge against interest rates...blah blah...
The real question is who owns the machine?
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