Key: National to stick $1b spending limit

Prime Minister John Key. Photo / NZ Herald

Prime Minister John Key has given a 'steady as she goes' message in his Opening to Parliament statement today, saying there would be some new spending, but National intended to stick to its prescription of returning to surplus and reducing debt rather than risk it in an election blowout.

Mr Key delivered his statement when Parliament began for the year at 2pm today, saying the pool of money from asset sales would be used over the next year to build new assets such as schools and hospitals.

He said the Government intended to stick to the $1 billion limit it has set for new spending in Budget 2014, rising by two per cent each year after that.

He gave few hints as to National's intentions for that, but said it would include the use of some of the $4 billion in the 'Future Investment Fund' - the fund into which the profits from asset sales are channelled.

"Budget 2014 will set out more details of allocations from the Future Investment Fund for capital investment in priority public assets, such as schools and hospitals."

He also indicated changes to the tax system, in particular targeting multinational corporations which try to minimise their tax load. He said the Government remained supportive of a broad-base, low-rate tax system.

"We will continue to finetune the system to ensure it remains fit for purpose and is able to deal with new challenges. That includes maintaining a focus on domestic and international efforts to combat profit sharing by multinationals."

Finance Minister Bill English has previously spoken of the same issue.

Mr Key's statement said the return to surplus showed a "remarkable turnaround" in the books. The Government's priorities remained to create a more competitive economy, drive through efficiencies in the public service, and support the rebuild of Christchurch.

In it he takes a veiled swipe at his Labour opponents: "In the coming years we need to lock in the hard won gains that have been made and reject the alternative prescription - high spending, untried economic experiments and a lack of focus on what really matters."

Mr Key said that the Trans Pacific Partnership was the Government's top priority in the trade area.

"Successfully concluding the TPP agreement would significantly improve New Zealand's access to some of the world's largest economies, including the United States and Japan."

However, it would also try to finalise trade agreements with countries including Korea, India, and Russia.

He said the Asia region remained a focus for trying to build New Zealand exports and ministerial delegations would concentrate on that part of the world.

The Government would also look to implement recommendations made in the wake of the false Fonterra contamination scare, including investing in food safety, to ensure international markets were reassured.

Mr Key also set out ongoing work across the Government, including welfare reform, mining and exploration, housing, public-private partnerships, the ultra-fast broadband programme, roading, and in education.

He also spoke about progress toward achieving the 'targets' the Government has set itself in areas such as raising school achievement, and reducing crime saying it had successfully changed the way Government Departments worked together.

Mr Key is now speaking to his statement and that will be followed up by responses from Labour leader David Cunliffe and other party leaders.