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New Zealand finance minister promises to maintain fiscal prudence, spread prosperity
[WELLINGTON] New Zealand Finance Minister Grant Robertson said on Friday the new government will boost the minimum wage, invent in infrastructure, and expand the central bank's objectives to include maximising employment.
Mr Robertson used his first major speech to reassure business leaders that the centre-left coalition government would maintain fiscal responsibility while ensuring a better distribution of the country's prosperity.
"This government will dedicate itself to closing the social and infrastructure deficits that have opened up in recent years," Mr Robertson said at an Auckland business breakfast.
New Zealand has been among the fastest-growing advanced economies in recent years, having come out of the global financial crisis comparatively unscathed, but it has slowed more recently as the country's robust growth ran into infrastructure bottlenecks.
Mr Robertson said the government aimed to get the government's net debt down to 20 per cent of gross domestic product (GDP) from the current 22.2 per cent within five years, and to deliver operating surpluses each year, barring a major crisis.
The government's Half-Year Economic and Fiscal Update (HYEFU) will be released on Dec 14, he added.
The Labour Party and its junior coalition partner, the New Zealand First Party, came to power after an inconclusive September election on a platform to curb foreign investment, restrict immigration and renegotiate certain trade deals.
That has raised some concerns that New Zealand's open economy would become increasingly protectionist. Business confidence dropped to an eight-year low last month on jitters around the new government.
Mr Robertson said the government would continue to welcome immigrants with the "right balance of skills" and to pursue free trade agreements with the European Union, Britain and others.
Prime Minister Jacinda Ardern told Reuters in an interview in November there would be no immediate cuts to immigration.
However, the government has already announced a ban on foreigners buying existing homes to begin in early 2018 and launched a review of its central bank's mandate to include maximising employment as a monetary policy goal.
Robertson on Friday played down any concerns that this could compromise the central bank's independence.
"The independence of the Bank remains paramount," Mr Robertson said. "We will continue to ensure that inflation is carefully managed within the target band."
Sharon Zollner, chief economist at ANZ Bank, who attended the speech, said "the aim of the speech primarily was to be reassuring and I think probably it would have been interpreted that way."