Key's Budget: Modest and restrained
Wednesday 2 Apr 2014 4:36 p.m.
Prime Minister John Key has issued his first major hint about what this year's Budget will look like. There is new money, but no shopping spree.
Tax cuts have been ruled out and the overall message is one of fiscal restraint to keep interest rates down.
The Prime Minister set the tone for Budget 2014 over lunch and the verdict is, don't expect much in the way of dessert.
"There is not going to be a lolly scramble in this year's Budget," says Mr Key.
Interest rates have already started going up after record lows, and steady as she goes is Mr Key's pitch to keep them down.
"Interest rates will be lower than they otherwise would have been," he says.
Four-hundred thousand New Zealand households have mortgages and their payments are on the way up. But Mr Key denies this is about damage control.
"I don't think so. You've already had one rate hike and you've had a number of political polls since then and it doesn't seem to have done a lot."
"National is trying to manage down people's expectations," says Labour Party leader David Cunliffe.
"People are facing increases in the cost of their mortgages because of John Key's policies," says Green Party co-leader Russel Norman.
Treasury has told the Government it has got a little over $1 billion to play with. But Mr Key has said no to tax cuts or changes to the tax brackets.
He has said yes today to extending New Zealand Trade and Enterprise, especially in China. It gets $69 million.
There will likely be a bit more for police and the Defence Force, and extending paid parental leave and the parental tax credit, but only slightly.
"It would be modest," says Mr Key.
Mr Key has set the scene for the Budget as modesty, restraint and fiscal responsibility. He says it is all about keeping interest rates low. It also means any big election promises the left makes could look like big spending.
"Don't be ridiculous – Labour is going to run fiscal surpluses the way we did every year in office," says Mr Cunliffe.
It is an election year and pledged restraint on both sides won't stop the odd lolly scrambling through.