Prime Minister John Key has revealed a $17 billion hole in the economy from falling dairy prices but says the Government remains committed to tax cuts.

Outlining the Government's priorities for the year ahead in his opening statement to Parliament on Tuesday, Key said weaker dairy prices, along with other factors, were contributing to slower growth in the nominal economy, which was expected to be around $17 billion lower over the next five years than was expected in last year's budget. This flowed through to "slightly less tax revenue, slightly lower operating balances and slightly higher debt, compared to budget forecasts".

But the Government's overall fiscal strategy remained unchanged – that was "to keep a tight rein on spending, focus on results from public services, start to pay down debt and look to return any excess revenue on top of this to tax payers".

Spending allowed for in the budget forecasts was also unchanged, at "$1 billon for budget 2016, $2.5 billion for Budget 2017 and $1.5 billion for budgets 2018 and 2019", though some of that timing might be affected.

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Looking ahead to key law changes, Key said legislation would be progressed to apply GST to cross border services and intangibles supplied by offshore suppliers, introduce a withholding tax on certain sales of residential property by people living overseas and remove some of the legislative obstacles to making tax administration simpler and more certain.

But the speech was notable for the lack of any new measures or initiatives which have not previously been foreshadowed by the Government.

The return of Parliament will likely be dominated by a row over the Trans-Pacific Partnership free trade agreement which has today been presented to Parliament, along with a national interest analysis, which has already been publicly released.

Key used his speech to press the case for the TPPA, which has sparked protests and forced his Waitangi Day no-show after security concerns. Labour has put a stake in the ground and says it will oppose parts of the deal.

In defence of the TPPA, Key told Parliament the agreement provided "much better access to large and important markets for New Zealand's goods and services and New Zealand has had to make relatively few concessions in return. A free trade agreement including the United States and Japan, the first and third largest economies in the world, has been sought over many years by successive New Zealand governments."

There was also a fresh face for the return of Parliament – West Coaster Maureen Pugh replaces former Trade Minister Tim Groser, who has taken a position as Ambassador to Washington.

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