Prime Minister John Key is starting the new year still optimistic the Eurozone will survive its sovereign debt crisis due to actions taken by policy makers there during the Christmas period, although the process is likely to be rough and untidy.
Still-relatively buoyant Asian and Australian economies were also good news for the New Zealand economy, which had been more resilient than people had expected, going into 2012.
Meanwhile, the government would stick to its programme of selling down half shares in four energy companies, starting with Mighty River Power in the third quarter of 2012. Key said Fairfax's Trade Me share sale late last year showed there was good demand for certain equities, with markets performing reasonably well over the last few years.
Speaking on National Radio this morning, Key said he was "a little bit more optimistic than others when it comes to Europe."
"I think they will eventually get through that process. I’m not saying it won’t be rough and untidy – it certainly will – but a number of actions that they’ve taken around the Christmas period seem to have at least shown some signs that it’s working," Key said.
If the global crisis did worsen, and the government needed to act on its own budget, a reduction in the new budget spending allowance would be the first action taken. The government is hoping to get its books back to surplus in the 2014/15 year.
"From the government’s point of view, our new budget spending component is in the order of about a billion dollars on average every year for the next three years. A little less this year, next year, and a little more, the year after that. So that’s the first port of call if you really had to [act further]. But let’s cross that bridge if we come to it," Key said.
"New Zealand’s economy’s been more resilient than others have thought. We grew at 0.8% in the third quarter of 2011 and we’ve still got a relatively buoyant Asia and Australia. That’s helping us here locally, so let’s just see how things go,” he said.
The government would stick to its mixed-ownership programme for Mighty River Power, Genesis, Meridian and Solid Energy. Key said the Trade Me share sale last year, which was three times oversubscribed, showed there was demand for equities.
Even though economic conditions had been weak over the last three years, equity markets had performed "reasonably well," he said.
"We know these are good companies, and we know that there’s likely to be considerable demand from New Zealanders. We believe we’re on track in terms of that programme. The first cab off the rank will be Mighty River Power in 2012, and at this point we haven’t seen anything that would indicate we should delay that process,” Key said.
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.