Too soon to talk about tax cuts: English

Finance Minister Bill English is moving to lower expectations of a windfall in the Government’s books ahead of new forecasts, saying spending pressures even before this week’s earthquake have been building up.

“There will be significant extra spending generated by the earthquake but it comes on top of other spending pressures that have been building up for a while,” he told the Weekend Herald.

Among those big ticket items included issues related to pay equity claims, the need to fund a significant growth in the prison population which would put pressure on operating and capital spending, as well as the pressures brought about by population growth.

Asked whether there was less chance of a tax- cut package in next year’s Budget, he said it was too soon.

“It is yet to be seen when you take into account some of these spending pressures.

“Even though the economy i s stronger we have yet to see whether the surplus is going to be stronger in the short term. But an accumulation of issues means it is unlikely to be big windfalls.”

English was also not yet sure if the Government would be borrowing to fund the Kaikoura infrastructure repair or defer projects already in the funding pipeline.

“That will all have to be considered. We don’t know the answer to that.”

English said the Government’s target of reducing net Crown debt [ from 25 per cent currently] to 20 per cent of GDP by 2020 remained in place but implied it could be delayed if necessary.

“The fiscal strategy stays in place until it is officially changed.

“We want to get to 20 per cent by 2020 and we’ve got other large capital calls on us — the housing infrastructure fund, funding of the CRL [ City Rail Loop] in Auckland, pretty significant demands from the Defence Forces.”

Defence Minister Gerry Brownlee released the Government’s third iteration of a military hardware plan outlining $ 20 billion spending up to 2030.

State Highway 1 has suffered seven major slips in the 7.8 quake and the rail line connecting Picton to Christchurch has been wrecked in several places in damage likely to total billions.