This week, the New Zealand finance minister Bill English presented his sixth budget, saying continued strong economic growth will see a budget surplus next year of AU$340 million rising to AU$3.5 billion in four years.
ICAA’s Mr White said New Zealand’s budget turnaround can provide great insight into Australia’s current budgetary situation.
“While you can’t compare apples with oranges in terms of these economies, it is difficult not to look for lessons in the ways that New Zealand has rebounded with its first surplus since 2008 and the great strides it has made in achieving a strong economic recovery,” Mr White said.
“By turning around its deficits of the last six years, New Zealand can now spend more money on big ticket issues like research and development, and welfare measures such as increased paid parental leave and more support for families with small children”.
Mr White attributed New Zealand's current surplus projections to five key areas it has focused on in the past seven years:
• A broader GST base with minimal exceptions
• Personal income tax rates that have remained constant over the past four years, with a top personal tax rate of 33 per cent compared with Australia’s 47 per cent (49 per cent including deficit levy)
• A different approach to dealing with crises, e.g. no levy on the rebuilding of Christchurch
• Tight fiscal control on spending
• A streamlined public sector.