Monday 21st March 2011 3 Comments
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New Zealand's economy will run on two speeds for some time with much of the country experiencing growth but quake-stricken Christchurch in a weak and contracting position, Prime Minister John Key says.
GDP data for the December quarter will be released on Thursday.
Key said during the period September's earthquake had been a setback, the housing market had been faltering and consumers were being careful about spending money.
"I thought we were starting to look a lot more positive coming into this year, and that generally numbers were supporting that, lower exchange rate, lower interest rates helping us, higher commodity prices," he told Breakfast on TV One.
"So a lot of reasons actually to be optimistic but obviously Christchurch has meant that effectively we are now going to have effectively a two speed economy, you are going to have growth around the country, particularly in the rural part of New Zealand, but a very weak and contracting position in Christchurch."
Over the weekend Key said the Government was going to cut back the $800 million of new spending it initially intended to put in the May budget.
He said more would be spent on health and education but spending in other areas would need to reduce.
Today Key said the pain would be shared: "It's not going to be a savage attack on one particular thing."
But the reality was savings had to be found.
"You either tax New Zealanders more or the Government spends a little bit less because eventually we've got to pay that debt back."
Key has previously ruled out a taxpayer levy to rebuild Christchurch and instead said more borrowing was needed.
About $5 billion is the estimated cost for the Government to cover the uninsured cost of rebuilding Christchurch.
The Greens have argued for a levy but Key this morning told Breakfast such a levy would have to be imposed on anyone earning over 40,000 to gather enough money and that could hamper economic growth further.
NZ imports rise in 'preferred' areas
Manufacturing volumes rise for second consecutive quarter
A little more optimism about economic growth
Concerns Reserve Bank too relaxed on inflation
Christchurch earthquakes shake GDP down
NZ home building consents slip
Inflation expectations edge lower
Economic recovery may have slowed