Bill and John aren’t happy with the economy

Photo: RNZ / Diego Opatowski

Photo: RNZ / Diego Opatowski

Like an All Blacks coach, they managed to get the economy to peak just at the electoral Word Cup.  But post election, the economic injuries are starting to show.   The already optimistic and minuscule predicted surplus is no more.

The Government’s flagship economic promise has been holed and is in danger of sinking after Treasury forecast a deficit this year – and with doubts over a return to surplus even in 2016.

It must have been a bitter pill for John Key and Bill English to swallow, after running the promise since 2011 and even claiming on the election stump the books were back in surplus.

The temptation must have been strong to tweak the numbers – as they had through ACC payments and excise duty in recent updates -but at a $572 million deficit the numbers were getting too big to rejig at the margins.

There was no “plausible” change that could be made to get a surplus forecast over the line, as English concedes.

Things have gone backwards quickly enough that no amount of papering over the cracks is going to disguise the disappointment.

And with the surplus in 2016-17 now hacked back to just $565m – roughly a mirror image of this year’s forecast deficit – there must be doubts about that too.

It’s worth noting that to build a war chest of $1.5 billion in 2017 for election year tax cuts, the Government has trimmed $500m off the 2015-16 and 2016-17 provisions for new spending.

Without those changes, the surplus forecast next year would be marginal to nil around $35m.

Having said that, the economic outlook remains robust.

The problem for National is that they need the surplus to buy the next election.  There will be such a lust for a fourth term, National’s plan is to “finally” give us all the stuff we’ve been holding out for.

But that can only be justified on the back of a strong economy.  The voters aren’t going to accept a bribe when they know it’s come from further borrowing.

 

– Stuff

 


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  • Blue Tim

    Don’t panic. Grant (the biggest account I’ve ever managed is my cheque account) Robbo will have the answers to safe us

  • Not Clinically Insane

    The hole left by the drop in expected taxation because of the low dairy payout is sizeable indeed

    • Elinor_Dashwood

      Yes, and that’s totally the Government’s fault.

      • Michelle

        Um how?

        • In the same way that the government takes the credit when it goes well, I guess.

  • Bruce Rayner

    I’ll get in first before the angry little and negative norman fans do.
    So what if there is a disappointment right now. NZ cant control world trade prices but I wonder constantly what would NZ be like today if for past 6 years a labour / green party was in power?? John Bill & co got NZ on a strong financial footing when most other countries were going for broke, some still are.
    Sure there were casualties but just consider the overall picture, and if you think the world still owes you a living then go live in Aust,UK or wherever and take all the doom n gloom mp,s with you

    • jude

      Hopefully some of these free trade agreements will kick in and our exports will rise exponentially!

    • Yeahright

      You are correct, we maybe having a less than expected income, but compared to the rest of the world I will take NZ any day.

    • Mainstream Mike

      There’s no way the markets would have let a Labour/Green government borrow 70 or 80 or 100 BILLION dollars. They would have whacked up taxes much more than English did, and they wouldn’t have been able to borrow anywhere near as much.

      As it is, John Key’s National Party camouflage on every one of Helen Clark’s policies, not a cent of real cuts to anything, 70 billion borrowed and all spent on welfare – it’s a complete and utter disaster.

  • Pluto

    I think it’ll be fine.
    Don’t think Treasury have factored in that Hone is no longer on the public teat.

    • Forrest Ranger

      Now you just need to get rid of the other hangers on like the mob of troughers that just went to the waste of time climate conference in Peru at our expense, and are planning to go to the waste of time follow up in Paris next year.

      • zotaccore

        Yes, getting rid of all the toxic Greens at the next election would be a great start given they have no electorate mandate to be in parliament therefore no political power to change anything, therefore a waste of space.

  • Addedup

    The biggest mistake English made was his choice of governer for the RBNZ, he is a fanatical lunatic and is quite dangerous with his obsession with 20sq km of real estate in Auckland at the expense of the rest of the country.

  • botti

    Contraception for welfare – you’d get massive drop in both short term costs and long terms costs (criminal justice, dependency).

    • I.M Bach

      And drug testing. If I can be drug and alcohol tested to work for a living then it’s only fair…..

  • Ratchette

    The alternative is the coalition from hell with comrade norman as fiance minister and labour without any positive policies to improve our fortunes. Duh !

    • Coffee Connoisseur

      There are more alternatives than that. People just need to wake up to them.

  • Wallace Westland

    Until this idiot winds back Helens excesses there is not a snow flakes hope in hell of balancing the books and never will be.
    The continued blindness to the ponzi style tax scheme that continues to feed middle class benefits via WFF, Interest Free student loans which are seldom repaid and increasing paid maternity leave.
    Add to that pay increases for popping out another kid to stay on the DPB for another 18 years and the mealy mouthed BS about child poverty and we will continue to owe money to China at a rate we can never repay no matter how much bloody milk powder we flog off to them in return!

    On top of that a bloated civil service and endless bureaucratic hoops to leap through to make the most minor of changes to your own property with mindless red tape via the RMA and now the introduction of Manu Whenua sites and who in their right mind would want to attempt anything in this snivelling little mindless PC sandpit.
    If it’s not fenced off it better be padded if it’s not padded it better be removed if it’s a tree it needs to be padded fenced off and buried in paperwork.
    Good luck balancing your books Bill.

  • BlitzkriegNZ

    How about they stop wasting so much of our money? Drop anything to do with the UN and the climate troughers to start with, that’d save a few hundred million easy.

    • I.M Bach

      “Climate and treaty troughers”…there, fixed.

    • Mainstream Mike

      Sure. chop the lot, fire 50,000 wellington bureaucrats… and it still makes zero real difference.

      NZ govt only spends money on four big things: welfare, super, health, education. You must cut there. The simplest way is to pick just one of those and stop all spending on it. Doesn’t really much matter which.

  • Jmac

    Only way that’s a sure bet to get a surplus will be to actually cut spending, not cutting the proposed increase in spending.

  • Richard McGrath

    Agree with many other commenters – this National Socialist government needs to cut spending – but they won’t, because they’re soft-cock Labour-lite pinkos.

    • Yeahright

      To grow an economy you can’t cut spending, you will just get into a downward spiral of less and less taxes coming in, cut more spending, less taxes and so on. You have to stimulate growth and hope this causes the upward spiral. It is the more proactive!

      • Richard McGrath

        Spoken like a true Keynesian! Just because the government doesn’t spend it on your behalf, doesn’t mean you won’t invest/spend it yourself – but on things of value to you, not to Bill.

        • Coffee Connoisseur

          So sold of key assets that were paid for, provided a good anual return and cost next to nothing to maintain on the promise of a surplus and haven’t achieved either. Well done! But then thats never what it was really about anyway now was it.

          • ex-JAFA

            You’re quite right. The partial sale was about raising funds for reinvestment elsewhere and to reduce debt. Almost the sort of thing a responsible business person would do.

          • Coffee Connoisseur

            Good businesses dont reduce debt by eliminating revenue streams. They do it by cutting costs and streamlining.

    • Kiwibabe

      If they had taken the razor to spending they would be out of office now.

  • rua kenana

    Bill and John had it easy with good world prices for NZ commodities over much of their tenure. And they still couldn’t manage a surplus. Disappointing!

    • Kiwibabe

      And similarly Clark and Cullen had a particularly strong economic up cycle to tax and spend from, none of which was sustainable. National has reigned in spending pretty well mostly, not perfectly of course, but what large organisation is ever perfect!

  • Sir Cullen’s Sidekick

    Time for my master’s medicine then! Tax and spend :-)

  • Robin Grieve

    If you keep spending like drunks, you are always going to be broke

  • Mainstream Mike

    But that can only be justified on the back of a strong economy

    It can’t be justified at all. Look at George Osbourne & Joe Hockey. That’s how you do it! Key needs cut 10-15% spending each and every year of this parliament, and the next one — and yes, that means dumping English for someone who can get the job done: Jami-Lee Ross, perhaps, Crusher Collins, or even David Seymour!

  • Kiwibabe

    Easy to criticise, reality is National is caught by something called democracy in which the opposition promises to spend even more, and yet can take the electorate with them should the incumbent government cut spending. Between a rock and a hard place. I reckon English is doing as well as humanly possible. No economy or government anywhere is able to produce better, so as Fred Dagg said “you don’t know how lucky you are.”
    Key definitely fired a wild one with his tax cuts comment, foolish, but forgiven against the other good work and leadership.
    Realism please!

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