Ratings decision may come tomorrow, says PM

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

Standard and Poor's may make a decision about New Zealand's rating as early as tomorrow evening after the budget is delivered, Prime Minister John Key says.

Three executives from ratings agency Standard & Poor's are in the country looking at whether to take its AA+ rating off negative watch and back to stable, or to downgrade it.

S&P's wanted to see operating surpluses to be recorded within three to five years.

Finance Minister Bill English gave the executives a briefing yesterday.

"I understand the meeting went well," Key told reporters.

"There was an extensive discussion and they certainly understand the plan. My understanding is that they are likely to give a preliminary verdict on the budget as early as Thursday evening."

Key had not received an indication about how S&P would act.

"I don't have any information from that meeting one way or another but my view has been in terms of putting together the budget, it's my view we won't be downgraded."

The Government has promised more spending on health, education and justice and yesterday announced an insulation package.

Key repeated that tough economic times meant there would not be "a lot more money to throw around".

His primary focus was to avoid a ratings downgrade which would add about 1.5 per cent to mortgages.

Some sector groups may be unhappy with the budget.

"I think inevitably when you are cutting expenditure in certain areas or reprioritising there will always be some people who feel aggrieved by that and there's a constituency for every dollar you spend as a government.

"But in reality I think New Zealanders know that we are putting together a budget in the worst economic conditions since 1930."

Key would not confirm a new prison would be funded in the budget but noted the Government had made it clear one would be needed.

Labour leader Phil Goff yesterday accused the government of pandering to ratings agencies and believed the Government could be exaggerating the threat of credit rating agencies to soften up the public for spending cuts.

New Zealand had one of the lowest levels of debt and had room to move in comparison to many other countries and the budget should be focused on creating jobs.

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

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."

-NZPA