John Key with MPs Bill English, Steven Joyce, Gerry Brownlee and Simon Power. Photo / Mark Mitchell
National is confident it will be able to keep its election promises despite Treasury suggesting the outlook is deteriorating and more people might lose their jobs than was projected.
Prime Minister-elect John Key is set to take control of the Beehive at a particularly difficult time economically and
yesterday he received a formal briefing on the situation from Treasury secretary John Whitehead.
Mr Key said he was told the numbers had deteriorated "a little bit" since the pre-election fiscal update which was released in early October.
"They are more pessimistic, but I wouldn't describe it as Armageddon," Mr Key said.
The pre-election update forecast a decade of deficits and rising unemployment, with numbers that were worse than expected.
However, since then the global financial crisis has intensified and the world is staring down the barrel of widespread recession.
Mr Key said the briefing from Treasury suggested the Government's deficits would be bigger than the pre-election forecasts but he would not say how much bigger.
That would be revealed when the Treasury does a full December fiscal update which National has requested.
Asked if he was confident of keeping his promises, Mr Key said he was.
"We are confident ... and the reason for that is that they were fully costed and fully funded," he said.
Mr Key is taking Mr Whitehead with him to the Apec summit in Peru in an unusual move which highlights the incoming Prime Minister's interest in the global economic outlook.
Mr Key said one of the things that was hardest to pick was the global growth outlook and the Apec meeting was a chance to "get as best a handle as we can" on what was going on.
Treasury presented National's leadership team with forecasts of what it thought would happen, as well as a weaker scenario should things get worse.
Mr Key said National's April 1 tax cuts made sense in both scenarios and Treasury felt the stimulus would come "at exactly the right time".
It is not yet clear if National may have to do more than it intended to stimulate the economy outside its election plans.
After Mr Key has been to Apec and Treasury has completed its December update, the new Government will examine whether there is a need for further stimulation.
