

Currently released so far... 12453 / 251,287
Browse latest releases
2010/12/01
2010/12/02
2010/12/03
2010/12/04
2010/12/05
2010/12/06
2010/12/07
2010/12/08
2010/12/09
2010/12/10
2010/12/11
2010/12/12
2010/12/13
2010/12/14
2010/12/15
2010/12/16
2010/12/17
2010/12/18
2010/12/19
2010/12/20
2010/12/21
2010/12/22
2010/12/23
2010/12/24
2010/12/25
2010/12/26
2010/12/27
2010/12/28
2010/12/29
2010/12/30
2011/01/01
2011/01/02
2011/01/04
2011/01/05
2011/01/07
2011/01/09
2011/01/10
2011/01/11
2011/01/12
2011/01/13
2011/01/14
2011/01/15
2011/01/16
2011/01/17
2011/01/18
2011/01/19
2011/01/20
2011/01/21
2011/01/22
2011/01/23
2011/01/24
2011/01/25
2011/01/26
2011/01/27
2011/01/28
2011/01/29
2011/01/30
2011/01/31
2011/02/01
2011/02/02
2011/02/03
2011/02/04
2011/02/05
2011/02/06
2011/02/07
2011/02/08
2011/02/09
2011/02/10
2011/02/11
2011/02/12
2011/02/13
2011/02/14
2011/02/15
2011/02/16
2011/02/17
2011/02/18
2011/02/19
2011/02/20
2011/02/21
2011/02/22
2011/02/23
2011/02/24
2011/02/25
2011/02/26
2011/02/27
2011/02/28
2011/03/01
2011/03/02
2011/03/03
2011/03/04
2011/03/05
2011/03/06
2011/03/07
2011/03/08
2011/03/09
2011/03/10
2011/03/11
2011/03/13
2011/03/14
2011/03/15
2011/03/16
2011/03/17
2011/03/18
2011/03/19
2011/03/20
2011/03/21
2011/03/22
2011/03/23
2011/03/24
2011/03/25
2011/03/26
2011/03/27
2011/03/28
2011/03/29
2011/03/30
2011/03/31
2011/04/01
2011/04/02
2011/04/03
2011/04/04
2011/04/05
2011/04/06
2011/04/07
2011/04/08
2011/04/09
2011/04/10
2011/04/11
2011/04/12
2011/04/13
2011/04/14
2011/04/15
2011/04/16
2011/04/17
2011/04/18
2011/04/19
2011/04/20
2011/04/21
2011/04/22
2011/04/23
2011/04/24
2011/04/25
2011/04/26
2011/04/27
2011/04/28
2011/04/29
2011/04/30
Browse by creation date
Browse by origin
Embassy Athens
Embassy Asuncion
Embassy Astana
Embassy Asmara
Embassy Ashgabat
Embassy Apia
Embassy Ankara
Embassy Amman
Embassy Algiers
Embassy Addis Ababa
Embassy Accra
Embassy Abuja
Embassy Abu Dhabi
Embassy Abidjan
Consulate Auckland
Consulate Amsterdam
Consulate Adana
American Institute Taiwan, Taipei
Embassy Bujumbura
Embassy Buenos Aires
Embassy Budapest
Embassy Bucharest
Embassy Brussels
Embassy Bridgetown
Embassy Bratislava
Embassy Brasilia
Embassy Bogota
Embassy Bishkek
Embassy Bern
Embassy Berlin
Embassy Belmopan
Embassy Belgrade
Embassy Beirut
Embassy Beijing
Embassy Banjul
Embassy Bangkok
Embassy Bandar Seri Begawan
Embassy Bamako
Embassy Baku
Embassy Baghdad
Consulate Barcelona
Embassy Copenhagen
Embassy Conakry
Embassy Colombo
Embassy Chisinau
Embassy Caracas
Embassy Canberra
Embassy Cairo
Consulate Curacao
Consulate Ciudad Juarez
Consulate Chennai
Consulate Casablanca
Consulate Cape Town
Consulate Calgary
Embassy Dushanbe
Embassy Dublin
Embassy Doha
Embassy Djibouti
Embassy Dili
Embassy Dhaka
Embassy Dar Es Salaam
Embassy Damascus
Embassy Dakar
Consulate Dubai
Embassy Helsinki
Embassy Harare
Embassy Hanoi
Consulate Ho Chi Minh City
Consulate Hermosillo
Consulate Hamilton
Consulate Hamburg
Consulate Halifax
Embassy Kyiv
Embassy Kuwait
Embassy Kuala Lumpur
Embassy Kinshasa
Embassy Kingston
Embassy Kigali
Embassy Khartoum
Embassy Kathmandu
Embassy Kampala
Embassy Kabul
Consulate Kolkata
Embassy Luxembourg
Embassy Luanda
Embassy London
Embassy Ljubljana
Embassy Lisbon
Embassy Lima
Embassy Lilongwe
Embassy La Paz
Consulate Lahore
Consulate Lagos
Mission USOSCE
Mission USNATO
Mission UNESCO
Embassy Muscat
Embassy Moscow
Embassy Montevideo
Embassy Monrovia
Embassy Minsk
Embassy Mexico
Embassy Mbabane
Embassy Maputo
Embassy Manila
Embassy Manama
Embassy Managua
Embassy Malabo
Embassy Madrid
Consulate Munich
Consulate Mumbai
Consulate Montreal
Consulate Monterrey
Consulate Milan
Consulate Melbourne
Embassy Nicosia
Embassy Niamey
Embassy New Delhi
Embassy Ndjamena
Embassy Nassau
Embassy Nairobi
Consulate Naples
Consulate Naha
Embassy Pristina
Embassy Pretoria
Embassy Prague
Embassy Port Of Spain
Embassy Port Louis
Embassy Port Au Prince
Embassy Phnom Penh
Embassy Paris
Embassy Paramaribo
Embassy Panama
Consulate Peshawar
REO Basrah
Embassy Rome
Embassy Riyadh
Embassy Riga
Embassy Reykjavik
Embassy Rangoon
Embassy Rabat
Consulate Rio De Janeiro
Consulate Recife
Secretary of State
Embassy Suva
Embassy Stockholm
Embassy Sofia
Embassy Skopje
Embassy Singapore
Embassy Seoul
Embassy Sarajevo
Embassy Santo Domingo
Embassy Santiago
Embassy Sanaa
Embassy San Salvador
Embassy San Jose
Consulate Strasbourg
Consulate St Petersburg
Consulate Shenyang
Consulate Shanghai
Consulate Sao Paulo
Embassy Tunis
Embassy Tripoli
Embassy Tokyo
Embassy The Hague
Embassy Tel Aviv
Embassy Tehran
Embassy Tegucigalpa
Embassy Tbilisi
Embassy Tashkent
Embassy Tallinn
Consulate Toronto
Consulate Tijuana
USUN New York
USEU Brussels
US Office Almaty
US Mission Geneva
US Interests Section Havana
US Delegation, Secretary
UNVIE
Embassy Ulaanbaatar
Embassy Vilnius
Embassy Vienna
Embassy Vatican
Embassy Valletta
Consulate Vladivostok
Consulate Vancouver
Browse by tag
ASEC
AORC
AMGT
APER
AU
AF
AS
ACBAQ
AFGHANISTAN
AFIN
AR
AE
AJ
ADANA
AEMR
AG
ATRN
ADPM
APECO
AGAO
AMED
AX
AM
AL
ADCO
AA
AECL
AADP
ABUD
AMEX
ACAO
ANET
AODE
ASCH
AY
APEC
AID
AORG
ASEAN
AFSI
AFSN
AINF
AGR
AROC
AO
AMBASSADOR
AFFAIRS
ASIG
ABLD
ASUP
AND
ARM
ARF
AQ
ATFN
AC
ACOA
AORL
ADM
AUC
AGMT
ACABQ
ASEX
AFU
ALOW
AZ
APCS
AVERY
ASECKFRDCVISKIRFPHUMSMIGEG
AER
AN
AIT
AMG
AGRICULTURE
AMCHAMS
ACS
BR
BA
BD
BL
BO
BF
BU
BILAT
BEXP
BRUSSELS
BK
BN
BM
BT
BY
BX
BTIO
BIDEN
BG
BE
BP
BBSR
BC
BTIU
BWC
BB
BH
BMGT
CH
CY
CA
CU
CS
CO
CVIS
CPAS
CMGT
CE
COUNTER
CASC
COUNTRY
CJAN
COUNTERTERRORISM
CG
CI
CD
CIDA
CJUS
CDG
CBSA
CEUDA
CR
CM
CLMT
CAC
CBW
CODEL
COPUOS
CWC
CIC
CW
CBE
CHR
CFED
CT
CONS
CIA
CTM
CDC
CVR
CF
CLINTON
CITEL
CLEARANCE
COE
CN
CACS
CAN
CONDOLEEZZA
CB
CSW
CITT
CARSON
CNARC
CACM
CDB
CARICOM
COM
CROS
CAPC
CTR
CV
CKGR
CBC
CL
CICTE
CIS
ECON
EFIN
ELAB
ETRD
EIND
EC
EINV
EAGR
ENRG
ETTC
EAID
EPET
ELTN
EWWT
EAIR
EFIS
EMIN
EG
EU
ER
EUN
EPA
ENVI
EXTERNAL
ECPS
ENGR
ETRC
ECIN
EN
EI
ELN
ET
EINT
ETRDEINVTINTCS
ES
ETRDEINVECINPGOVCS
EZ
ETRO
EDU
ETRN
EFTA
EAIG
EK
EUREM
EURN
ECONCS
ECONOMICS
ENVR
ELECTIONS
EAP
ENIV
ECONOMY
ESA
EINN
ECONOMIC
EIAR
EXBS
ECA
ECUN
EINDETRD
EUR
EREL
EUC
ESENV
ECONEFIN
ECIP
ENERG
ENNP
EFINECONCS
EFIM
ENGY
EAIDS
EINVEFIN
EINVETC
EUMEM
ETRA
ETC
ERNG
ETRDECONWTOCS
EUNCH
ECINECONCS
EINVECONSENVCSJA
EXIM
ERD
EEPET
IR
IS
IZ
IAEA
IO
IAHRC
ID
IC
IT
IRAQI
IWC
IN
IL
ISLAMISTS
IV
ICAO
INDO
ITPHUM
ITPGOV
ITALIAN
IPR
ICRC
INTERPOL
IQ
IBET
IMO
INR
ITRA
INTERNAL
ICJ
ICTY
IRS
ILO
INRA
INRO
ISRAELI
IEA
INRB
ITALY
ITU
IBRD
IIP
ILC
INTELSAT
IZPREL
IMF
INMARSAT
IRAJ
IDA
ICTR
IA
IGAD
IF
IDP
ITF
ISRAEL
IEFIN
IRC
IACI
KN
KCRM
KOMC
KNNPMNUC
KIPR
KPAL
KWBG
KSCA
KFRD
KNNP
KUNR
KTIP
KWMN
KSTC
KFLU
KOLY
KISL
KPAO
KMDR
KJUS
KSTH
KDEM
KCOR
KIRF
KAWC
KU
KTFN
KWAC
KNPP
KERG
KSEO
KACT
KHLS
KZ
KGHG
KTIA
KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG
KCRCM
KE
KPKO
KCIP
KDRG
KVPR
KV
KIDE
KICC
KPRP
KBIO
KSUM
KGIT
KCFE
KG
KBTS
KFLO
KMPI
KS
KGIC
KPAI
KHSA
KTLA
KSEP
KTEX
KFSC
KOCI
KHDP
KPLS
KTDB
KHIV
KCSY
KSAC
KTRD
KID
KMRS
KOM
KSAF
KRVC
KR
KMOC
KNAR
KIRC
KBCT
KSPR
KFIN
KBTR
KJUST
KNEI
KAWK
KGCC
KMCA
KREL
KMFO
KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG
KFTFN
KVRP
KCOM
KO
KLIG
KAID
KVIR
KNSD
KHUM
KSEC
KRAD
KPRV
KCMR
KPWR
KCHG
KIFR
KCFC
KICA
KPIN
KSCI
KESS
KDEV
KTBT
KCRS
KCGC
KOMS
KRIM
KTER
KREC
KPOA
KWWMN
KRGY
KPAK
KWNM
KMIG
KDDG
KRFD
KWMM
KWMNCS
KX
KRCM
KPAONZ
KNUC
KDEMAF
KNUP
MARR
MOPS
MASS
MCAP
MTCRE
MNUC
MIL
MX
MEDIA
MO
MPOS
MU
ML
MA
MP
MY
MERCOSUR
MG
MD
MW
MK
MAS
MEETINGS
MR
MT
MI
MOPPS
MASC
MTS
MLS
MILI
MAR
MTRE
MEPN
MAPP
MTCR
MEPI
MQADHAFI
MAPS
MARAD
MASSMNUC
MEPP
MCC
MZ
MILITARY
MDC
MRCRE
MC
MV
MIK
MUCN
NATO
NL
NZ
NPT
NI
NAFTA
NU
NDP
NIPP
NP
NPA
NG
NRR
NO
NSC
NEW
NE
NH
NR
NA
NS
NSF
NZUS
NATIONAL
NSG
NC
NT
NAR
NK
NGO
NV
NSFO
NSSP
NASA
NW
NPG
NORAD
NATOPREL
OTRA
OAS
OPRC
OIIP
OVIP
OREP
OPDC
OEXC
OSCE
OFFICIALS
OMIG
ODIP
OFDP
OECD
OPIC
OBSP
OPCW
OFDA
OTR
OSAC
OSCI
ON
OCII
OES
OVP
OIC
OPAD
OIE
OHUM
OCS
PREL
PGOV
PK
PHUM
PINS
PARM
PA
PTER
PINR
PREF
PHSA
PBTS
PBIO
PO
POL
PE
PARMS
PM
PROG
PL
PAK
POLITICS
PORG
PTBS
PNAT
PUNE
POLICY
PDOV
PCI
PROP
PGOVSMIGKCRMKWMNPHUMCVISKFRDCA
PBT
PP
PS
PAO
PG
PY
PTERE
PGOF
PALESTINIAN
PKFK
PSOE
PEPR
PPA
PINT
PMAR
PRELP
PSEPC
PREFA
PGOVE
PINF
PHUMPGOV
PNG
PMIL
PGOC
PFOR
PCUL
PLN
PSA
PGIV
POLINT
PAS
POGOV
PHUMPREL
PHUMBA
PEL
PGGV
PNR
PHALANAGE
PARTY
PGOVLO
PRAM
PHUS
PDEM
PECON
PF
POV
PROV
PRL
PREO
PAHO
PHUH
PSI
PINL
PU
PRGOV
PAIGH
POLITICAL
PARTIES
POSTS
RS
RU
REACTION
REPORT
REGION
RIGHTS
RO
RW
RCMP
RF
RM
RFE
RSP
RP
RICE
ROBERT
ROOD
RELATIONS
RIGHTSPOLMIL
RUPREL
RSO
SU
SNAR
SO
SOCI
SW
SENV
SMIG
SCUL
SP
SZ
SENVKGHG
SR
SY
SA
SYRIA
SF
SI
SC
SWE
SARS
STEINBERG
SN
SG
SIPRS
ST
SEVN
SL
SPCE
SNARIZ
SSA
SNARCS
SYR
SK
SPCVIS
SHUM
SIPDIS
SHI
SH
SOFA
SEN
SNARN
SAARC
SAN
SANC
SCRS
TRGY
TBIO
TU
TF
TERRORISM
TI
TSPL
TPHY
TH
TIP
TSPA
TC
TO
TW
TX
TZ
TNGD
TT
TL
TV
TFIN
TS
TRSY
TINT
TN
TURKEY
TBID
TD
TK
TR
THPY
TP
TAGS
UNGA
UN
UK
US
UNC
UNSC
USUN
UG
UP
UY
USEU
UNESCO
USPS
USTR
UZ
UNHRC
UNO
UNMIK
UNAUS
UNHCR
UNCHR
USAID
UNVIE
UAE
USOAS
UNFICYP
UV
UNEP
UNODC
UNCHS
UNIDROIT
UNDESCO
UNDC
UNCHC
UNDP
UNCND
USNC
UNPUOS
UNICEF
UNCSD
UE
Browse by classification
Community resources
courage is contagious
Viewing cable 06WELLINGTON396, NEW ZEALAND GOVERNMENT UNVEILS CAUTIOUS BUDGET
If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs
Understanding cables
Every cable message consists of three parts:
- The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
- The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
- The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #06WELLINGTON396.
Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
06WELLINGTON396 | 2006-05-24 06:06 | 2011-04-28 00:12 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Wellington |
VZCZCXRO5271
RR RUEHNZ
DE RUEHWL #0396/01 1440637
ZNR UUUUU ZZH
R 240637Z MAY 06
FM AMEMBASSY WELLINGTON
TO RUEHC/SECSTATE WASHDC 2815
INFO RUEHBY/AMEMBASSY CANBERRA 4416
RUEHNZ/AMCONSUL AUCKLAND 0755
RUCPDOC/USDOC WASHDC 0052
RUEATRS/DEPT OF TREASURY WASHDC
RHHMUNA/CDR USPACOM HONOLULU HI//JO1E/J2/J233/J5/SJFHQ//
RHHJJAA/JICPAC HONOLULU HI//ONN/OT/OTS//
UNCLAS SECTION 01 OF 03 WELLINGTON 000396
SIPDIS
SENSITIVE
SIPDIS
STATE FOR EAP/ANP-DRICCI AND EB
STATE PASS TO USTR FOR BWEISEL
COMMERCE FOR 4530/ITA/MAC/AP/OSAO/ABENAISSA
TREASURY FOR OASIA
E.O. 12958: N/A
TAGS: ECON EFIN NZ
SUBJECT: NEW ZEALAND GOVERNMENT UNVEILS CAUTIOUS BUDGET
REF: A. WELLINGTON 344 (NOTAL)
¶B. CANBERRA 697 (NOTAL)
¶C. 2004 WELLINGTON 849 (NOTAL)
(U) Sensitive but unclassified - protect accordingly.
¶1. (SBU) Summary: New Zealand's Labour government maintained
its image for tightfistedness by delivering a 2006-7 budget
with an anticipated surplus and no tax relief. Most of the
government's new spending will go to the health sector and
road improvements and deliver on Labour's 2005 campaign
promises, including increased welfare and interest-free
student loans. Demands for even bigger budget spending may
grow louder, however, as New Zealand faces an economic
slowdown this year, following five years of strong growth.
Economists view the budget as fiscally sound and unlikely to
affect New Zealand's relatively high interest rates or the
value of its dollar, which the government has been talking
down in hopes of spurring exports. But the budget does
little to improve New Zealand's lagging competitiveness. It
also was immediately denounced by the opposition for lacking
Australian-style tax cuts despite the big surplus. End
summary.
An equitably sliced pie
-----------------------
¶2. (U) In his seventh budget since Labour regained power,
Finance Minister Cullen on May 18 announced a NZ $52.3
billion (US $32.5 billion, NZD 1.00 = USD .6221) spending
plan for 2006-7, a 3.5 percent increase from the current
fiscal year. It includes NZ $2.2 billion in new spending, a
small rise from the $2 billion in new spending provided in
the current budget.
¶3. (SBU) The budget reflects Labour's philosophy of
redistributing income to ensure a "fairer society," with the
public sector providing a social safety net. The largest
outlay of new capital spending -- NZ $1.3 billion over five
years -- is to cover the rising costs of road building and to
speed up completion of major highway projects. For the first
time, the government will be spending more on roads than it
collects in gas taxes and vehicle registration fees,
according to Cullen. The health sector -- which accounts for
21 percent of all government outlays -- will receive a NZ
$750 million injection of new spending in each of the next
four years, raising its annual expenditure to NZ $10.6
billion (an 8.5 percent rise from the current year). Next
year's increase in new health spending will be a slightly
smaller boost than the current year's.
¶4. (SBU) The budget's other big-ticket items fulfill the
Labour Party's campaign promises from the September 2005
election: More low- to middle-income families will receive
support payments (called "tax relief" by the government) at a
cost of NZ $1.85 billion over the next four years. The
budget also allocates NZ $1 billion over the next four years
to pay for interest-free student loans.
¶5. (U) Deals hammered out with Labour's support parties also
increased appropriations, including spending for the hiring
of 1,000 more police, as promised to Winston Peters, foreign
minister and the leader of New Zealand First. As a result of
Labour's agreement with United Future leader Peter Dunne (and
now minister of revenue), he and Cullen are preparing a
review of business taxation, with likely reductions expected
to be introduced in April 2008.
¶6. (U) There are no immediate tax cuts, either for businesses
or individuals, despite a NZ $8.5 billion operating surplus
(equivalent to 5.4 percent of GDP) forecast for the fiscal
year ending June 2006. Cullen has designated some of the
surplus to cover capital expenditures and contributions to
the Superannuation Fund, to pre-fund a public pension plan
that is expected to reach NZ $10 billion in assets this year.
Cullen cited a desire to prepare New Zealand to care for an
aging population and an anticipated economic slowdown as
reasons why there was no room for tax cuts. The budget
surplus is expected to drop to NZ $5.8 billion in 2006-7
after accumulating over the previous five years.
Still no tax cuts
WELLINGTON 00000396 002 OF 003
-----------------
¶7. (U) Hoping to draw attention to Australia's recently
proposed income tax cuts (ref B), the opposition National
Party labeled the New Zealand government's plan a "Bondi
budget" in reference to the famous Sydney beach. National
argued that the lack of tax relief will accelerate an
existing brain drain from New Zealanders moving to Australia.
An estimated net 20,400 New Zealanders left for Australia in
the year to April 2006. The Labour government's resistance
to tax relief was an issue in last year's election campaign
and almost cost it the election. New Zealand's top tax rate
is 39 percent, applied on the incomes of the 12 percent of
New Zealanders who earn more than NZ $60,000 a year (about US
$37,000). Only 5 percent of taxpayers paid the higher rate
when it was enacted by the Labour-led government in 2000.
The New Zealand Inland Revenue Department predicts that
increased government revenues may allow for tax cuts before
the 2008 election.
¶8. (U) Meanwhile, the New Zealand Treasury is forecasting
that economic growth will slow to about one percent in the
year to March 2007 -- a sharper downturn than Treasury
predicted six months ago (ref C) -- due largely to the
previously high New Zealand dollar, higher interest rates and
gas prices and, hence, slower consumer spending. The
downturn gives Cullen justification for years of fiscal
conservatism: Having stockpiled surpluses during five years
of economic expansion, his government now can afford to boost
spending as the economic clouds darken. "The fool who spends
on the upturn will find himself broke on the downturn,"
Cullen told Parliament. Since 2000, real GDP growth has
averaged 3.6 percent annually, with a peak performance of 4.8
percent in 2004. Treasury expects growth to rebound in the
year to March 2008 to more than 3 percent as the New Zealand
dollar dips in value and spurs agricultural exports.
¶9. (SBU) Economists see the 2006-7 budget as cautious and
adding little stimulus to the economy. The government can
increase spending because of the operating budget surplus and
low government debt relative to GDP. Gross debt is expected
to fall to 23 percent of GDP by June 2006, down from a level
of more than 60 percent of GDP in the early 1990s. The net
debt level -- the government's financial assets offset by the
gross debt -- should drop to 6.7 percent of GDP. When the
government's pension fund is included, its financial assets
exceed its liabilities.
For defense and foreign aid
---------------------------
¶10. (U) The budget sets aside NZ $72.8 million in new funding
for defense operating expenses, as the second installment in
the government's 10-year, NZ $4.6 billion program to
modernize New Zealand's defense infrastructure and increase
its military personnel. The budget also allocates an
additional NZ $305 million for defense hardware for the next
fiscal year, the third installment of a 10-year, NZ $3
billion capital replacement and upgrade project. The defense
appropriations for 2006-7, including the new spending, are
equivalent to about one percent of GDP and compose about 2.5
percent of all government appropriations. Septel will look
at the defense budget in greater detail.
¶11. (U) Official development assistance remains at 0.27
percent of GNI this year but rises to 0.28 percent in 2007-8,
with assistance totaling NZ $1.4 billion over the next four
years.
Comment
-------
¶12. (SBU) Clouds forming over a fair-weather economy are
giving the government some cover, as it keeps a tight rein on
spending and refuses to countenance tax cuts -- even in the
face of continuing budget surpluses. Proceeding cautiously
to ensure economic and political stability, Labour also is
playing to its core constituents with increases in social
spending. However, the tax-cut debate continues, and
National's dire warnings that more New Zealanders may vote
with their feet -- to Australia -- still could get traction.
The budget also does little to address New Zealand's lagging
competitiveness or long-term economic growth. More spending
on the health sector, welfare and student loans
WELLINGTON 00000396 003 OF 003
redistributes, rather than creates, national wealth. Still
to be seen is whether a possible 2008 cut in the business tax
will prompt businesses to boost capital investment and raise
productivity, which holds the key to New Zealand's long-term
economic growth.
Budget forecast
---------------
¶13. (U) Annual avg pct change, year ending
March 31, unless otherwise indicated
Actual Est. Forecast
2005 2006 2007 2008 2009 2010
Consumption 5.7 4.3 1.8 1.1 2.3 2.5
--public (1) 5.2 5.9 5.6 2.2 3.9 3.4
--private 5.8 3.8 0.7 0.8 1.9 2.3
Investment 7.8 6.0 -4.6 -0.2 4.8 4.6
Exports 3.9 0.1 1.0 5.6 5.0 3.8
Imports 13.7 5.1 -1.0 -0.9 3.4 3.7
GDP 3.7 2.1 1.0 3.3 3.5 3.1
Unemployment(2)3.9 3.8 4.7 4.7 4.4 4.5
CPI inflation(3)2.8 3.3 3.4 2.4 2.0 2.0
Current account
--NZD million -11062-14462-13925-12188-11383-11035
--pct of GDP -7.4 -9.3 -8.8 -7.3 -6.5 -6.0
90-day bank
bill rate (4) 6.9 7.6 7.0 6.3 6.0 5.8
Spending (5)
--NZD million 46234 50445 52254 55158 57973 60527
--pct of GDP 30.6 31.9 31.8 32.6 32.5 32.4
Revenue (5)
--NZD million 52065 56652 56190 57781 59728 64157
--pct of GDP 34.5 34.2 34.4 33.9 33.3 34.1
Operating Balance (6)
--NZD million 6247 8486 5768 4343 3561 5412
--pct of GDP 4.1 5.4 3.6 2.6 2.0 2.9
Superannuation Fund (6)
--end year
NZD million 6555 10015 12739 15826 19335 23251
--pct of GDP 4.3 6.4 8.0 9.4 10.8 12.4
(1) Forecast for public consumption is influenced by
government defense spending.
(2) Rate in March quarter, seasonally adjusted.
(3) Annual percentage change.
(4) Average for March quarter.
(5) Core Crown accounts; excludes some items such as Crown
entities and state-owned enterprises. For year ending June
¶30.
(6) For year ending June 30.
McCormick