web analytics
The Standard
Advertising

Margin of error

Written By: - Date published: 10:09 am, December 19th, 2012 - 15 comments
Categories: debt / deficit - Tags:

So, National’s still on track to surplus in 2014/15, eh? A $66m surplus. Well, don’t be counting those chickens just yet. That projected Total Crown Operating Balance Excluding Gains and Losses, known to everyone as the surplus or deficit, is just 0.07% of projected Total Crown spending and revenue that year (see graph of the projected surplus beside revenue/expenditure at the bottom). That makes wafer thin look fat.

And it’s not exactly like Treasury has laser-precision accuracy when predicting 2.5 years ahead. In PREFU 2008 they were $15.9 billion out on the size of the deficit for 2010/11. In HYEFU 2009, they were $3.24 billion out on the size of the deficit for 2011/12. In other words, the surplus they’re projecting is a fraction of Treasury’s normal margin of error when projecting over two and a half years.

But there’s a bigger question: is any surplus at all better than any deficit?

I mean, last year, Treasury said the surplus would be $1.4 billion (Labour was chastised when their projected accounts showed a surplus of ‘only’ $660m). Since then, $1.3b has been lost off the forecast government balance. Would it be worse to lose, say, another $200m off that and go into a tiny deficit than losing that $1.3b but staying just just in the positive was? Of course not. The $1.3b that has disappeared from the projection in the last year means $1.3b more on the government’s debt than previously thought – an extra $200m would mean deficit, but it would have a far smaller impact on the government’s debt pile.

Besides, a billion here and there doesn’t really matter – it’s 1% of annual government turnover. And there’s nothing magical about being in surplus, as long as you’re generally on a track to getting your debt under control being in surplus in 2014/15 or 2016/17 (which is the downside scenario in Treasury’s books, and everyone else’s central scenario) is neither here nor there.

But National thinks its terribly important to be able to say they’re getting to surplus in 2014/15, even though they probably won’t be in office when it happens, because … um … they decided it ought to be. To that end, they’re putting a billion tax increase on petrol so they won’t have to borrow even more for their pointless motorways. And they’re not investing any new money in non-transport capital for years. Not to mention the grinding down of the public workforce though sub-inflation pay rounds, and the culling of staff at all levels.

Those are decisions with quite serious consequences that are being made for a very unserious reason – so that forecasts that are almost very, very wrong can say that there will be a tiny, neither here nor there, surplus in a year when the Nats are unlikely to even be in power any more.

fiscal balance projection for 201415

 

15 comments on “Margin of error”

  1. wyndham 1

    And the proposed extra petrol tax(es) will hit the less well-off hard. Yet there is no suggestion that the tax cuts, given earlier to the wealthy, should be reversed or even lessened.
    Another hike along to road to ever increasing social division.

    • Draco T Bastard 1.1

      Of course there isn’t. National’s purpose is to enrich the rich at everyone else’s expense which is why all the extra taxes they’ve put on since they cut taxes for the rich adversely impact the poor more.

    • Lanthanide 1.2

      “And the proposed extra petrol tax(es) will hit the less well-off hard.”
       
      Not sure about that. The media quoted someone saying that for every 1c in tax, it increases the average fuel cost per year by $15. So $45 spread over a whole year, $3 a month, isn’t likely to hit “the less well-off hard”. It is also the case that the “less well-off” probably drive cars less than the average, simply because they can’t afford WOF/registration/fuel/insurance in the first place anyway.

      • Draco T Bastard 1.2.1

        If they need to drive, which they probably do due to the rather poor public transport in NZ, then they will be worse off. It may only be $3/month but it’s still less than what they had and if what they had wasn’t enough in the first place…?

  2. Enough is Enough 2

    We need some clever bean counters to keep an eye on those books between now and 2014 because you can be sure of one thing, there are cook booking instructions going out to every government department right now.

    They will be moving items off the balance sheet to get the answer they simply must have going into the election.

    The problem is 90% of this country is financially illiterate so if Mr English tells them we have a surplus, they will believe him.

    • Nick 2.1

      “They will be moving items off the balance sheet to get the answer they simply must have going into the election.”
      One problem with your conspiricy theory. The 2014/15 surplus will be announced in 2015, AFTER the election..

  3. Peter 3

    So what, in your opinion, are the three main reasons the electorate should be against National aiming for a surplus?

    • One Tāne Viper 3.1

      The fact that they aren’t “aiming”, they’re aspiring.
       
      The fact that they’re failing.
       
      The fact that Labour led governments do a much better job.
       
       
       
       

    • vto 3.2

      Nothing wrong with it Peter.

      The problem is the lies and deception they use every time they talk about it.

      I mean, quite clearly, having to raise taxes to achieve it means they have not achieved it. They are just lying deceiving bastards and this is proof again.

    • bad12 3.3

      National could achieve surplus simply by adding another 1 cent to the income tax of the top 40% of income earners, the negative effect of that extra cent taxation upon those with plenty of disposable income would be ZERO,
       
      By loading those who have no disposable/discretionary spending  in their income, the bottom 40% of earners, with the cost of achieving surplus National are simply short circuiting 200-250 million dollars annually from passing through the local economy instead raking this into the Government coffers,
       
      There are 2 adverse economic effects that will ensue from this point, there will be a severe reduction in the use of petrol products and the estimated tax will not eventuate for the Government, and/or, in order to maintain their present use of petrol products those with no discretionary income in their budget will cut back on spending into the local economy which will cause the Governments tax take to shrink even further, less business to be conducted and thus create even more unemployment which is a direct cost to Government,
       
      The fact is that there is up to 7 billion dollars of taxation annually being evaded or avoided where Government could more than balance it’s books by ensuring all due taxation is paid throughfurther legislation and reversing the 50% staff cuts inflicted upon Government tax employees across the country,
       
      Any fool can see,(with the exception of Slippery and the idiot from Dipton English), that if there is no-one round to ensure taxation is paid then a lot of it won’t be….

  4. NoseViper (The Nose knows) 4

    On Bryan Crump tonight there was an interesting thing on Argentina and how it is selectively choosing statistics to bolster its financial standing. A government statistician was pushed out of her job, and can’t get any job, because she refused to change the statistical methods she had been instructed to use so that the results titled in the government’s favour. Government here might have to look at new ideas in manipulating unwelcome stats.

  5. tracey 5

    Any evidence the surplus will continue beyond 2014/15?

  6. tracey 6

    Could the media stop going to bank economists for so-called analysis… These guys have so much vested interest it would almost be funny if it werent masquerading as impartial.

    Its like asking the ceo of nzx whether he thinks our assets should be listed.

  7. tracey 7

    “New Zealand emerges from recession,” 2010 bill english

    Yet yesterday i heard him on the radio and three times he mentioned us being in recession as paet of his surplus explanation.

Links to post

Important links

Recent Comments

Recent Posts

  • Recognizing Palestine: The European Parliament Votes
    Last week I wrote a blog drawing attention to Sweden’s formal recognition of the state of Palestine (the second Western state to do so after Iceland).  That move has created ripples throughout the international community. In recent months the parliaments… ...
    GreensBy Kennedy Graham MP
    3 days ago
  • Recognizing Palestine: The European Parliament Votes
    Last week I wrote a blog drawing attention to Sweden’s formal recognition of the state of Palestine (the second Western state to do so after Iceland).  That move has created ripples throughout the international community. In recent months the parliaments… ...
    GreensBy Kennedy Graham MP
    3 days ago
  • Recognizing Palestine: The European Parliament Votes
    Last week I wrote a blog drawing attention to Sweden’s formal recognition of the state of Palestine (the second Western state to do so after Iceland).  That move has created ripples throughout the international community. In recent months the parliaments… ...
    GreensBy Kennedy Graham MP
    3 days ago
  • Minister has work to do over Xmas
    Red flags raised in a multi-agency review into how Phillip Smith was able to flee the country highlight the inadequacies of those very same agencies not having red flags in place that would have notified them of his plans, says… ...
    3 days ago
  • Minister has work to do over Xmas
    Red flags raised in a multi-agency review into how Phillip Smith was able to flee the country highlight the inadequacies of those very same agencies not having red flags in place that would have notified them of his plans, says… ...
    3 days ago
  • Minister has work to do over Xmas
    Red flags raised in a multi-agency review into how Phillip Smith was able to flee the country highlight the inadequacies of those very same agencies not having red flags in place that would have notified them of his plans, says… ...
    3 days ago
  • Gerry Brownlee’s revolving airport door story
    A new report shows Gerry Brownlee is the latest Cabinet Minister to have contracted the infectious tell-porkies-until-you-are-caught disease, Labour’s Chief Whip Chris Hipkins says. “A Civil Aviation Report out today shows that despite being an extremely recognisable figure, Gerry Brownlee… ...
    3 days ago
  • Gerry Brownlee’s revolving airport door story
    A new report shows Gerry Brownlee is the latest Cabinet Minister to have contracted the infectious tell-porkies-until-you-are-caught disease, Labour’s Chief Whip Chris Hipkins says. “A Civil Aviation Report out today shows that despite being an extremely recognisable figure, Gerry Brownlee… ...
    3 days ago
  • Govt spend on transport out of step with reality
    The National Government is planning to allocate ever increasing amounts of taxpayer funding to build expensive new motorways despite record numbers of New Zealanders flocking to buses and trains, said the Green Party. The Government released its Government Policy Statement… ...
    GreensBy Julie Anne Genter MP
    4 days ago
  • Govt spend on transport out of step with reality
    The National Government is planning to allocate ever increasing amounts of taxpayer funding to build expensive new motorways despite record numbers of New Zealanders flocking to buses and trains, said the Green Party. The Government released its Government Policy Statement… ...
    GreensBy Julie Anne Genter MP
    4 days ago
  • Solar homes stymied by Govt inaction
    Government inaction is allowing the big power companies to discourage the nascent solar power sector, the Green Party said today. Green Party MP Gareth Hughes launched a petition today calling on the Government to empower the Electricity Authority to act… ...
    GreensBy Gareth Hughes MP
    4 days ago
  • Foreign buyers for iconic island must add value
    Labour will look very closely at any Overseas Investment Office application to purchase Pakatoa Island if it is not bought by a Kiwi, says Labour’s Land information Spokesperson Stuart Nash. “Pakatoa is an iconic island in the middle of Hauraki… ...
    4 days ago
  • Way opening for April Sun in Cuba
    The United States of America’s President’s historic announcement yesterday to restore diplomatic ties with Cuba should be applauded by the New Zealand Government. The announcement marks a turning point in more than five decades of hostility between the two countries… ...
    GreensBy Kennedy Graham MP
    4 days ago
  • Minister ducking for cover over ‘Diplomat Case’
    Apparently the Ministerial Inquiry into what now seems to be being referred to as ‘The Diplomat Case’ ( I have a few other names for it) has been completed and is in front of Foreign Affairs Minister McCully. Initial Reports seem to… ...
    GreensBy Jan Logie MP
    4 days ago
  • Energy users need answers on Vector share plans
    Energy Minister Simon Bridges needs to stop ducking for cover about whether or not the Government will support plans to nationalise and then privatise $2.1 billion of shares in the Auckland Electricity Consumer Trust, Labour's Energy spokesperson Stuart Nash says. “It… ...
    5 days ago
  • Turning up the heat on working conditions
    A “Jobs That Count” campaign has the full support of Labour, the party’s Labour Relations spokesperson Iain Lees-Galloway says. Organised by the Meat Workers Union, the campaign aims to put the spotlight on job insecurity in the meat processing industry. ...
    5 days ago
  • Biosecurity it’s everyone’s responsibility
    Biosecurity costs New Zealand millions of dollars in attempting pest eradication and much more in ongoing management of pests in farming, horticulture, beekeeping and conservation, as well as in our own backyards and recreation areas. More work must happen at… ...
    GreensBy Steffan Browning MP
    5 days ago
  • Failure to diversify puts prosperity at risk
    Beyond the news that a long-promised surplus is unlikely, further embarrassment is hidden in the fine print of the half year economic and fiscal update, Labour says. "National’s failure to rebalance the economy is further exposed in projections from its… ...
    5 days ago
  • Ombudsman probe targets Ministerial integrity
    John Key is on notice that the entrenched cynical and manipulative abuse of official information requests by his Government will no longer be tolerated, Labour’s Open Government spokesperson Clare Curran says. “The announcement by the Ombudsman of a wide-ranging review… ...
    6 days ago
  • Bill English’s face is redder than his books
    The Government owes New Zealanders an apology for failing to deliver the surplus it spent four years and two election campaigns promising, says Labour’s Finance spokesperson Grant Robertson. “Bill English’s face is redder than the Crown accounts. This is the… ...
    6 days ago
  • Is the Health Minister accountable to the public? He doesn’t seem to thin...
    Lately I’ve been involved in a sort of farcical standoff with the Health Minister, who seems to be under the illusion that I have no right to ask questions about conflicts involving Health Promotion Agency Board member Katherine Rich, and… ...
    GreensBy Kevin Hague MP
    6 days ago
  • Irresponsible tax cuts lead to seventh successive deficit
    National's borrowing to pay for cutting the top tax rate was irresponsible and will likely lead to a seventh successive deficit, the Green Party said today. Treasury have forecast a $572 million deficit this year in its Half Year Economic… ...
    GreensBy Russel Norman MP
    6 days ago
  • Irresponsible tax cuts lead to seventh successive deficit
    National's borrowing to pay for cutting the top tax rate was irresponsible and will likely lead to a seventh successive deficit, the Green Party said today. Treasury have forecast a $572 million deficit this year in its Half Year Economic… ...
    GreensBy Russel Norman MP
    6 days ago
  • Minister closes down dissent on climate change
    Minister closes down dissent on climate change In a threatening letter to Maori leaders, Minister for Climate Change Tim Groser says he will be requiring future international delegations to toe the party line, Labour’s Climate Change spokesperson Megan Woods says.… ...
    6 days ago
  • Heartfelt sympathy for Sydneysiders
    The Labour Party has offered its heartfelt sympathy to the people of Sydney after the hostage situation in the city, says Labour’s Acting leader Grant Robertson.  “Our thoughts are with all those who went through this horrific and traumatic experience. ...
    6 days ago
  • Farewell at Phillipstown
    Last Wednesday, I attended the farewell for Tony Simpson, Principal of Phillipstown School. It was a very emotional event where many of us in the large crowd shed tears. Bagpipes and tiny tamariki performing kapahaka brought the house down and… ...
    GreensBy Catherine Delahunty MP
    1 week ago
  • Farewell at Phillipstown
    Last Wednesday, I attended the farewell for Tony Simpson, Principal of Phillipstown School. It was a very emotional event where many of us in the large crowd shed tears. Bagpipes and tiny tamariki performing kapahaka brought the house down and… ...
    GreensBy Catherine Delahunty MP
    1 week ago
  • The CIA Torture Report
    Earlier this week, the United States Select Committee on Intelligence released the Committee Study of the Central Intelligence Agency’s Detention and Interrogation Program.  The report, which was five years in the making, looked into the CIA’s interrogation techniques from 2001… ...
    GreensBy Kennedy Graham MP
    1 week ago
  • The CIA Torture Report
    Earlier this week, the United States Select Committee on Intelligence released the Committee Study of the Central Intelligence Agency’s Detention and Interrogation Program.  The report, which was five years in the making, looked into the CIA’s interrogation techniques from 2001… ...
    GreensBy Kennedy Graham MP
    1 week ago
  • Haere Rā 2014
    We’ve almost reached the end of the Parliamentary year so I wanted to take a moment to reflect on some of my highlights of the term in this blog post. It’s been an absolutely hectic year juggling an election campaign… ...
    GreensBy Gareth Hughes MP
    1 week ago
  • Labour applauds High Court decision on Ruataniwha
    Today’s decision by the High Court on the Ruataniwha scheme is a victory for NewZealand’s environmental groups, says Labour’s Conservation spokesperson RuthDyson. ...
    1 week ago
  • A welfare system for the 21st Century
    Today Child Poverty Action Group released a background paper on ‘The complexities of ‘relationship’ in the welfare system and the consequences for children.‘ The report includes 16 recommendations to modernise our welfare system which is no longer fit for the… ...
    GreensBy Jan Logie MP
    1 week ago
  • Welfare system out of date and out of touch
    A new Child Poverty Action Group report released today highlights another example of how our outmoded social welfare system is harming kids, says Labour’s Social Development Spokesperson Carmel Sepuloni.  “The complexities of how a ‘relationship’ is defined in the welfare… ...
    1 week ago

Public service advertisements by The Standard

Current CO2 level in the atmosphere