Budget 2013 would engender business confidence and demonstrate further improvement in New Zealand's financial position, BNZ senior economist Craig Ebert said yesterday.
Finance Minister Bill English releases his fifth Budget tomorrow and is expected to make a significant social policy announcement around housing and poverty, along with the usual comments about returning the country's books to surplus.
The Government last week raised $1.7 billion from the partial sale of Mighty River Power, which can be used for wider social spending in health, education and infrastructure.
New Zealand's improving fiscal path was predi-cated mainly on expansion in the private sector, Mr Ebert said.
Increased estimates of rebuilding work in Canterbury helped, but buoyancy of business and consumer confidence signalled strong economic growth more generally.
''Even drought threats have come and gone, meaning a bounce-back in agriculture production can be expected.''
The recovery in New Zealand's accounts was not the consequence of an aggressive cutback in government spending and/or tax hikes of the sort many other countries were having to institute, he said.
The Government even had a ''little fat'' to play with in the Budget.
''We will be most interested in how all of this affects the 'fiscal impulse' measure the Treasury recalculates for Thursday's Budget. Many have held this measure aloft as a force of great negativity.
"We are not so sure it's as bad as all that - especially when one accounts for the strong capital expenditure programme the Government is undertaking,'' Mr Ebert said.
Westpac senior economist Michael Gordon said the lead-up to the Budget had been unusually quiet.
That was not a bad thing, especially if the previous two Budgets were compared where most of the pre-announcements were around cost control and squeezing more revenue from the existing tax regime.
This time, the fiscal accounts had been tracking on the stronger side of forecasts and the Government's long-stated goal of returning to surplus by 2015 looked to be on track, he said.
''Even so, that doesn't leave a lot of wiggle room in either direction, hence the paucity of new initiatives announced before this week.''
New operational spending was like-ly to be in line with what was already allowed for in last year's Budget.
The accelerating economy was giving the Government some breathing room, Mr Gor-don said.
Tax revenue was running about 1% ahead of forecasts in the nine months to March, because of both higher-than-expected incomes and stronger collection and enforcement by Inland Revenue.
That was expected to translate to a $6.9 billion deficit for the current fiscal year to June, compared with the $7.3 billion deficit projected in December. On the other side of the ledger, details were awaited on how the proceeds would be spent on social assets such as hospitals, schools and roads through the Future Investment Fund.
Westpac was also looking for an elaboration of the Treasury's estimates of the costs of rebuilding work in Canterbury, which was recently upgraded from $30 billion to $40 billion, the Government's liability increasing by $2 billion.
Some of the increase would reflect better information and some would reflect rising construction costs, Mr Gordon said.
Budget
• Paucity of pre-Budget announcements
• Significant social spending initiative expected
• More details on partial sale of state-owned assets
• Accounts on track for surplus in 2015
