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|9 July 2014||
Fitch’s positive outlook backs Govt programme
Credit ratings agency Fitch Ratings’ decision to revise New Zealand’s AA sovereign rating outlook from stable to positive is a vote of confidence in the New Zealand economy and the Government’s programme, Finance Minister Bill English says.
The positive outlook, which was announced overnight, indicates the likely direction of the credit rating over the next year or two, although it is not confirmation that a change will occur.
“As Fitch notes, the Government’s fiscal consolidation and its track to surplus in 2014/15 are strengthening the resilience of New Zealand’s credit profile,” Mr English says.
“Furthermore, it confirms that the Government has a credible plan to increase its fiscal surplus in the years ahead and to reduce net core Crown debt to 20 per cent of GDP by 2020.
“And Fitch comments that New Zealand’s economic policy framework, business environment and standards of governance rank among the world’s strongest from a credit perspective, warranting ‘high grade’ sovereign ratings.”
In its ratings update, Fitch also notes that New Zealand’s main vulnerabilities relate to its high net external debt and dependence on commodity exports.
“The Government remains focused on working with New Zealand households and businesses to lift our economic competitiveness,” Mr English says.
“We have made some good progress in addressing our longstanding vulnerabilities, with both the current account deficit and New Zealand’s net international liabilities substantially lower than they were five years ago.”
Alongside Fitch’s AA rating with a positive outlook, New Zealand is rated Aaa with a stable outlook by Moody’s and AA with a stable outlook by Standard and Poor’s
Family well-being is at the heart of National’s Budget 2014.
We will spend $500 million to help whanau and children, with free GP visits for under 13-year-olds, an extension of paid parental leave and an increase in parental tax credit.
National’s strong and careful management of the economy through the hard years of the last five years is now reaping benefits to our families, our schools, tertiary institutions and to healthcare. Investment into young people always pays off and our young people and families deserve our utmost support as a government.
Funding will also go toward education to prepare young New Zealanders for the growing workforce and growing economy. $10 billion will be spent on early childhood, primary and secondary education with a further $3 billion on tertiary education.
Our Government will continue to build on our successes and work toward surplus as predicted for 2015. We’re expecting larger surpluses in the following years, and a reduction of Government debt to 20 per cent of GDP in 2019/20.
National hasn’t wavered from their four key priorities; responsibly managing Government finances, building a more competitive and productive economy, delivering better public services, and supporting the Christchurch rebuild.
When the economy is strong and growing, employers have more confidence to create jobs for people. The average income has risen $3000 in the past two years and is forecast to increase by $7,600 to $62,300 by 2018. Another 172,000 jobs are expected by 2018. This means more opportunity and higher wages for New Zealanders. Our progress over the last year is only proof of this, with 84,000 more jobs created and nearly 15,000 New Zealanders supported off welfare and into work. The average weekly wage increased by 3.2 per cent with inflation of just 1.5 per cent.
The budget is about managing our growing economy, and spending in priority areas that will make a real difference in communities and the lives of Kiwis.
This will be the first time spending on health tops $15 billion a year.
National will also invest $132 million to help ensure all New Zealanders are paying their fair share of tax, and further reductions to ACC levies are forecast for 2015/16. We will also continue to work on making housing more affordable.
Since 2008, our Government Budgets have helped us out of the domestic recession, global financial crisis and the aftermath of the Canterbury earthquakes.
The hard work that businesses and families have done over the last few years are paying off and it is encouraging to see the benefits of this work starting to come through.