There were no real surprises in the Half-Year Economic and Fiscal Update and Budget Policy Statement issued by the New Zealand Government on December 17, 2013.
Our commentary highlights the cautiously optimistic approach.
The Government continues to predict a return to surplus in 2014-2015.
In addition, the economy is forecast to grow by an average of 2.6% each year over the next five years and the unemployment rate is expected to fall below 6%in 2014-2015 and down to 4.8% in 2018.
However, the Government faces five key challenges leading into Budget 2014 and the ensuing parliamentary term, striking a balance between affordability, demand and supply for housing; getting a sustainable, high-value public service; driving growth in the regions; globally competitive cities; and managing demographic change in a fiscally responsible manner.
Budget 2014 will be pivotal not only to the current Government’s hopes of winning the 2014 election but also largely set the scene for the hopes of the Government to win a fourth term in 2017.
Chris Money is Director of PricewaterhouseCoopers based in Auckland. For full commentary of the Half-Year Economic and Fiscal Update and Budget Policy Statement, please visit www.pwc.co.nz