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Finance Minister Bill English - Source: ONE News -
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On the same day hundreds of New Zealanders heard they will lose their jobs, there's a chilling new forecast from the government.
Finance Minister Bill English is planning his first Budget. He says the recession could cost our economy $50 billion over the next three years - that's $12,000 for every man, woman and child.
The brakes will be going on government spending.
Staff at Inland Revenue have already been told there will be up to 250 redundancies there.
The Ports of Auckland is where New Zealand touches the world with half our imports and a quarter of our exports passing through the port.
But with volumes well down, the port needs fewer hands and it is cutting 30 jobs as part of a rejig of its container terminals.
Not that it was enough to spoil lunch for senior executives at the Finance Minister's pre-Budget Business Leaders' Luncheon. But there was more than salmon and lamb on the menu.
Just like the Ports of Auckland, English is serving up a sobering forecast that the same recession that is justifying layoffs will slash $50 billion from New Zealand's economy over the next three years.
"That's $50 billion of output that we will not recover as a nation. It's a permanent loss to our GDP and unfortunately $50 billion that cannot be taxed by government," says English.
English says that has already cost the government an extra $1.8 billion in the eight months to February.
All of which is making an already tight Budget look even tighter and the next round of tax cuts less likely.
"He is softening the country up for a Budget that is going to see a break of the major promise that National made in the election campaign that people would be better off through tax cuts," says Phil Goff, Labour leader.
English says tax cuts will only go ahead if the government can afford them.
"They give people a reward for effort and the incentive to get ahead. But we must consider whether they can be afforded in the economic environment and the debt profile that I have talked about today."
That government debt is set to more than double in the next five years, leading some of those listening to push for more radical steps to control it.
"You might see the idea that we will float some shares, like 49% shareholdings in some of the SOEs, the electricity companies, to raise the capital to repay the debt," says Alasdair Thompson of the Employers and Manufacturers Association.
Assets sales are off the government agenda at the moment but three more years of high debt could change that.
The Finance Minister is also very worried about New Zealand's credit rating. English told ONE News he has had officials from the IMF and international credit rating agency Standard and Poors in his office talking about exactly what is going to be in the Budget and how it could affect our AA borrowing rating . If that were to be downgraded it would not only increase the costs of borrowing but might make it more difficult to get hold of that money as a nation.
English is confident he can come up with a plan in the Budget that will deal with that. New Zealanders will see if he has when the Budget is delivered on May 28.
