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Thursday, March 11, 2010

New Zealand Fin Min: Government To Control Public Spending Growth

By Rebecca Howard

Dow Jones Newswires

WELLINGTON -(Dow Jones)- New Zealand Finance Minister Bill English said Friday the government would heed the Reserve Bank of New Zealand's call to control public spending to help curb a rise in interest rates.

"We will control the growth of public spending," English told Radio New Zealand. The government is due to present the budget for the fiscal year to June 30, 2011 on May 20.

Thursday, the Reserve Bank of New Zealand held the official cash rate at a record low 2.5% and reiterated it expected to begin removing policy stimulus around the middle of 2010.

Reserve Bank governor Alan Bollard said Thursday that fiscal restraint would be "welcome" and would "help reduce the work that monetary policy might otherwise need to do."

English reiterated that new spending in the upcoming budget would be limited to NZ$1.1 billion and said most government departments, other than health and education, would get no new money for three to five years.

The finance minister said a planned tax package to be included in the budget would be fiscally neutral and "won't add to Doctor Bollard's problem with interest rates."

English reiterated, however, that an NZ$7 billion infrastructure package over the next five years is locked in.

"We don't plan to pull back on that," he said.

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