Budget not written for the credit rating agencies, says English

Bill English with copies of the Budget at the printers this morning. Photo Mark Mitchell

Accusations this Thursday's budget is being written to pander to international credit rating agencies are being denied by Finance Minister Bill English.

English watched his first budget rolling from the printing press today and said it would be balanced with government spending maintained in the near future, but with a plan to stop long term debt levels growing too large.

"This is the first budget on the road to recovery and it is predictable. There won't be any surprises... the focus is getting the debt under control," said English.

Prime Minister John Key has said the budget should do enough to avert a credit downgrade -- which would result in higher interest rates for the Government and all New Zealanders -- from rating agency Standard and Poor's.

S&P is being briefed ahead of the budget and some have said it appears that the Government is more concerned about the agency's opinion than producing the best possible budget.

Labour leader Phil Goff said New Zealand had one of the lowest levels of debts and had room to move in comparison to many other countries.

He felt the budget should be focused on creating jobs and there should be no slashing and burning of spending.

"It should not be about Standards and Poor's writing the budget," said Goff .

He believed the Government could be exaggerating the threat of credit rating agencies to soften up the public for spending cuts.

English denied that the budget was being written to meet the demands of credit rating agencies.

"Our concern is less with the ratings agencies and more with making sure New Zealand's debt does not get out of control because it is New Zealanders who have to repay it."

English said the agencies had said the same to every government -- that they wanted to see a credible path to reducing debt.

Despite offering a way to get debt levels under control the Government would be unlikely to return to budget surpluses in the next five years, English said.

The Government has indicated the budget will not contain promised tax cuts and will also put a hold on contributions to the New Zealand Superannuation Fund.

However, Key said some people would be surprised by the size of the home insulation programme and the amount of savings that had been found.

NZPA