Harman reads between the lines; thinks he’s got the Big Budget Reveal

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One big number is likely to stand out of this Thursday’s Budget.

That will be a huge forecast Government surplus for sometime in the next Parliamentary term.

Mr English has been recently addressing each of National’s regional conferences and in those speeches he has talked about “better than expected” macro numbers featuring in the Budget.

Ten days ago he told his party’s southern regional conference in Wanaka o that in “two or three years” the Government would be recording a five billion dollar surplus.

“New Zealand has done a pretty good job of getting us back to surplus,” he said.

“And now the surpluses kind of look like they are locked in.

“So now the political landscape is rising surpluses.

“So we can’t run the argument that there is no money because I will be showing numbers in the Budget, which show two or three years out, five billion dollar surpluses.

“So we are not going to be able to say there is no money.”

Just what he means by “two or three years” was not defined any more tightly but what it is likely that he is referring to either the 2018 or 2019 Budget.

The half-yearly fiscal update published last December forecast a $3.1 billion surplus for the 2018/19 fiscal year.

That would suggest the $5 billion figure would be more likely to fall in the 2019/20 year and one source familiar with Budget preparations told POLITIK that this might be the case.

If that is so, then the Government could confidently promise the $3 billion in tax cuts the Prime Minister has been talking about.

In Parliament yesterday, answering questions from Labour’s Grant Robertson, he appeared to be offering similar hints.

“Due to the hard work of the Public Service, the members of the various coalition Governments, and the New Zealand public, this Budget will indicate that New Zealand has choices out ahead of us that very few other developed countries have,” he said.

“They simply will not have choices because their public finances are not yet in a sustainable position—ours are.”

Historically, just as a National government has dug the country out of a big hole, and things go better, the electorate tires of seeing the same old faces and gives the money all to Labour to give away and dig a new hole for the next National government.

Tax cuts will strategically be a great move, but National also must keep in mind that the point comes when nurses, teachers and police want to be rewarded for dutifully working with tighter belts.

 

Richard Harman, Politik

 


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  • biscuit barrel

    The thing to remember having a surplus still means they are borrowing money when you look at cash in cash out basis.

    “Relative to Budget 2015, the domestic bond programme for the 2015/16 fiscal year remains unchanged at $8.0 billion.” Treasury borrowing program
    And the numbers rise to $9 bill after that

    “A higher funding requirement beyond 2015/16 means forecast bond programmes increase from $7.0 billion to $9.0 billion for each of the 2016/17, 2017/18 and 2018/19 fiscal years.”

    As for spending , Im picking that now Judith Collins is back in the police portfolio, they will be getting an increase for the first time since she left the job.

  • Dave

    I hope so, as this surely boosts English and Key, at the demise of Robertson, and we would welcome Mr 7% closer to 5%. That being so, we might see a resurgence of Ms Adhern, and the preferred Labor Leader. Lipgloss & lipstick at dawn.

  • Wheninrome

    Yes, national needs to spend the bickies because sure as labour will make promises based on any surpluses that national has steered the country towards and then claim credit.
    Spend up national, go for it all those wish list items of infrastructure. We will thank you with another ter, plus enjoy the benefits of the fruits of our work.

  • PaulVD

    Biscuit Barrel, that’s why we don’t pay much attention to cash accounts. (They allowed Muldoon to get away with wrecking the Government’s finances because he stored up obligations that did not cost cash until later.) Even when running a real surplus measured on a proper accrual basis, the Government still needs to borrow money to pay for investments (think infrastructure, student loans, ACC and other investment funds) and to repay past loans that have come due. That is actually what is meant by “a higher funding requirement”.
    Very roughly, a surplus of $5B would allow the Government to invest $4B in new assets and still pay net debt down by $1B. But if $10B of old debt comes due, they would have to borrow a fresh $9B to achieve that.

  • rua kenana

    A government surplus is a rest-of-community deficit.
    Govt gets its money from taxes and a few other things and if it gives less back it has a surplus, but rest-of-community isn’t getting what they paid for.
    Not saying a government deficit or surplus is good or bad, that’s a complex issue, just that there’s a lot more to the well-being of NZ society than just the government’s books showing positive or negative.

    • Oh Please

      Socialism has a spend-spend-spend attitude. While it might make the populace feel good for a short while, at the end of the day it has to be paid for. We get this magic roundabout every 10 years or so – socialism spends then we face a period of time while the right balances the books. Now the books are balanced let’s hope the young and the hard-of-understanding realise that left wing promises are fleeting only. Debt is only good in the short term.

    • contractor

      Granted, however the well-being of NZ in no small part stems from growing wage and business incomes lifting the tax take, and the data certainly indicates that tax income could be increasing paving the way for debt reduction, properly funding govt services, and in time some tax reduction.

  • Grizz30

    3 billion dollars spread about the economy essentially means very little for me and very little to get excited about. However if there was ever going to be a tax cut, the first place to start would be the tax brackets. They need reviewing. Adjusting them up would give a small contribution towards beer and fish and chip money for most tax payers. I do not like the idea that any potential surplus could be spent willy nilly and if there is one, there are going to be a lot of watering mouths that will want fed. My preference is to collect less from the taxpayer.

    That said, National in the past have made police and health (esp Tony Ryall) portfolios their own. They may have to throw some carrots their way to keep those sectors on board.

  • When will it dawn on politicians tiny minds that a budget “surplus” merely means that we are being overtaxed .

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