About the $7.5 billion surplus

37 comments on “About the $7.5 billion surplus ”

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1. ianmac 1

   9 October 2019 at 9:44 am

   Giles on Morning Report did try to get Bridges to admit errors (lies?) in his tirade against the surplus but typically Bridges just shouted over Giles.

   https://www.rnz.co.nz/audio/player?audio_id=2018716855
   • Tiger Mountain 1.1

     9 October 2019 at 11:00 am

     Giles did well. Not many at RNZ would say to Bridges that he had a “facile” argument–does he want continued employment one might ask given how the station has been toadying to National lately…
   • Wensleydale 1.2

     9 October 2019 at 2:54 pm

     Bridges trotted out the old "hard-working Kiwi tax-payers" line on the telly yesterday, while claiming Robertson was being a miserable skinflint with the cash box. Honestly, every time I hear that jabbering sock-puppet use that phrase I want to throw things at the TV. He's such a disingenuous arsehole. The general consensus of opinion among people questioned on the street seemed to be "No, we don't want a tax cut. We want the government to fix all the shit that doesn't work properly any more." You know… like housing, hospitals, schools, etc. But no, Simon insists on telling us the government is hoarding all your money. What would you rather have, New Zealand? Enough houses, or an extra $50? Take all the time you need.
2. UncookedSelachimorpha 2

   9 October 2019 at 9:57 am

   Alternatively, a surplus means you 'taxed too much' or 'didn't spend enough'. It is not an indicator of financial prowess or effective government. The media and political discourse on this is infantile.

   Unfortunately both parties (and the public and media) are fully engaged in the narative that surplus / deficit are equivalent to the same thing in your household budget. Not true at all and any party that starts to point that out would be doing the nation a huge favour. You can choose to treat government finances in this misleading way for ideological reasons, but there is no other justification.

   There is not a government bank account that fills / empties and thus permits government spending or not. Unlike a household, the government can create / destroy NZD. That is not to say that the government can spend in an unlimited fashion – there are economic factors to consider – but "running out of money" isn't one of them.

   As Siobhan put so well, a "surplus" when you have terrible unmet need in poverty and homelessness – can indicate gross mismanagement and be something of a social catastrophe.
   • Dukeofurl 2.1

     9 October 2019 at 10:09 am

     yes you are right. But they need to discuss the cash deficit numbers as well , they are there, but 'buried'

     The Cash deficit is $0.7 bill.

     Australia has the same issue but magnified . Their Treasury only talks about the Federal Cash Accounts while the Finance Ministry who handles the departmental accounting side only talks about Accrual Accounts.
     • Ric 2.1.1

       10 October 2019 at 11:44 am

       What would be some of the bigger items that make the large accrual surplus so different to the small cash deficit ?
   • Adrian Thornton 2.2

     9 October 2019 at 10:36 am

     @UncookedSelachimorpha +1, I believe that it was National under Key that really embedded this trend in comparing state finances with household finances, and of course in a very cynical way….real shame Labour is following the same trend.
     • Nic the NZer 2.2.1

       9 October 2019 at 11:11 am

       This idea was well embedded before Key. It goes right back to at least the 1984 Labour government.
       • Adrian Thornton 2.2.1.1

         9 October 2019 at 11:24 am

         Thanks, that sounds familiar now you say it, and it doesn't surprise me, I think I am still trying to block out the memory of that 1984 Labour government.
         • Dukeofurl 2.2.1.1.1

           9 October 2019 at 1:50 pm

           Your memory is wrong about 1984.

           The accrual accounting didnt come in till 1992 , NZ being the first country to do so

           https://www.victoria.ac.nz/sacl/about/events/past-events-temporary/past-conferences/6ahic/publications/Buhr_plenary_paper.pdf

           Its a bit old now from 2010 but relevant now

           "The adherence to a cash basis of accounting was also understandable when one considers that government budgets and the authority to spend, i.e. government appropriations, were on a cash basis. Indeed, the move to accrual financial statements has meant a move to accrual budgeting and in some cases the use of accrual appropriations."

           Thats why I still look at the cash based as being highly relevant because thats what the approval to spend is still largely done by in the annual budget.

           Now the waters are muudied even more as the asset/valuation figures are all mixed up with various 'surpluses' , ie the Kiwirail revaluation
           • Nic the NZer 2.2.1.1.1.1

             9 October 2019 at 3:04 pm

             My recollection is correct. The false analogy between government and household budgets did begin during Rogernomics, if it wasn't applied earlier.
             • UncookedSelachimorpha …

               9 October 2019 at 4:59 pm

               Reagan, Thatcher, the right-wing all around the world went crazy on it. Don't think it was a particularly NZ thing.

               An excuse to cut spending on the majority and reduce the contribution from the wealthy, as it turned out.
           • UncookedSelachimorpha 2.2.1.1.1.2

             9 October 2019 at 5:03 pm

             "…. I still look at the cash based as being highly relevant because thats what the approval to spend is still largely done by in the annual budget. "

             The whole point is – why is that the basis of approval to spend?? There is no doubt a cash balance – but the reason why that balance is used the way it is, to control spending and to judge fiscal performance of governments – is driven by ideology and not by any obvious logic. The government has unlimited access to its own currency.
   • Abba Lerner 2.3

     11 October 2019 at 12:17 am

     Unlike a household, the government can create / destroy NZD

     If the govt can create NZDs and use it for govt spending. That raises an interesting question, what is the purpose of taxation?
     • UncookedSelachimorpha 2.3.1

       16 October 2019 at 9:32 pm

       Good question. Tax still has a purpose. For examples (from my limited understanding):

       – Tax forces people to acquire and value NZD (it enforces the value of the state currency). You can only pay your tax in NZD, not bitcoin, not AUD, not gold etc etc

       – A tool for redistribution of resources (if progressive)

       – A tool for withdrawing money from the economy where necessary (as can cutting spending)
3. Chris 3

   9 October 2019 at 10:03 am

   "The combined surplus for the two years at least is greater than Joyce’s claimed deficit."

   Wee bit of an understatement there I feel.
4. Chris 4

   9 October 2019 at 10:09 am

   "But the incident should, in a perfect world, end for ever the claim that National is somehow a better manager of the economy than Labour is."

   And because it's not a perfect world something – in fact a lot – needs to be done to dispel the myth. Now could be a good time for those efforts to begin.
   • westiechick 4.1

     9 October 2019 at 10:52 am

     I just cannot understand how the myth persists. We survived the GFC quite well because we were not exposed to international debt because Michael Cullen had paid it down while being taunted by the nats about being parsimonious when they thought it was time for tax cuts. The relatively pain free GFC experience was then credited by the media to Bill "Pineapple Pizza" English as an example of his skilful economic management. Irony much.
     • Nic the NZer 4.1.1

       9 October 2019 at 11:47 am

       The surplus, deficit and debt position of the government is completely irrelevant to the governments ability to spend or deal with a financial crisis.

       That is why its so highly contended in politics. There is no possibility of actual screwing up, but if you can make it work politically your side gets to implement its preferred budget policy under the cover of budget responsibility.
   • gsays 4.2

     9 October 2019 at 11:03 am

     "But the incident should, in a perfect world, end for ever the claim that National is somehow a better manager of the economy than Labour is."

     The $7.5B surplus also puts paid to my mothers refrain that the Labour Party is the party of the working man.
     • Dukeofurl 4.2.1

       9 October 2019 at 11:14 am

       Your mothers refrain is still correct , on a 'household budget' basis the spending and income is about even.
     • Adrian Thornton 4.2.2

       9 October 2019 at 12:22 pm

       Your mother obviously hasn't gone to many Labour Party hall meetings lately (well not the ones I have been too) you can usually count the actual "working men" in attendance on one hand…plenty of comfortable boomers though..which lines up nicely with the demographic of the bench of the Labour party, so no surprises there I guess.
       • Wensleydale 4.2.2.1

         9 October 2019 at 2:40 pm

         Probably because working men (and women) are too shagged after a day's hard graft to bother attending Labour Party meetings. They just want a hot meal and a warm bed.
         • UncookedSelachimorpha 4.2.2.1.1

           9 October 2019 at 5:06 pm

           Probably just having a quick break before going to their second – or third – job.
       • the other pat 4.2.2.2

         10 October 2019 at 11:44 am

         oh how Simion Bridges of you
     • Chris 4.2.3

       15 October 2019 at 10:48 am

       "The $7.5B surplus also puts paid to my mothers refrain that the Labour Party is the party of the working man."

       …although not a party for the unemployed.
5. belladonna 5

   9 October 2019 at 11:40 am

   Why was my post on Labour's broken promise to fix resthomes deleted?
   • David Mac 5.1

     9 October 2019 at 12:52 pm

     Hi Bella, your post is in a 2nd earlier thread about this subject.
   • Dukeofurl 5.2

     9 October 2019 at 2:01 pm

     What promise to fix broken rest homes? I looked at your other comment to see if you were making a point instead of ranting , but no avail
   • Incognito 5.3

     9 October 2019 at 2:09 pm

     This one? https://thestandard.org.nz/7-5-billion-surplus/#comment-1659861
     Presumably, you put it under a different post and lost track of it.
6. Tiger Mountain 6

   9 October 2019 at 11:43 am

   “Stevie’s Hole” was always spurious, though certainly did its job for the filthy Nats, via knocking a few vital percent off the trending Labour vote during the 2017 campaign.

   Mr Bridges tax cuts will equate to less tax take, and reduced Govt. services one way or another. That is not a pathway to the higher wage economy which the current Govt is trying to implement.
7. belladonna 7

   9 October 2019 at 3:20 pm

   Dukeofurl you obviously dont read the reports on rest homes where elderly and sick people have unbelievably bad treatment, the food is diabolical to the extent that the Nurses Union are investigating and Labour could use some of their 7billion surplus and sort it out like they promised. You obviously have little empathy for the elderly, do you have shares in this industry? It's a disgrace,
8. Ken 8

   9 October 2019 at 4:47 pm

   11billion dollar hole burnt in Joyce's pants when they caught fire?
9. Grant not Robertson 9

   9 October 2019 at 5:35 pm

   Well three cheers for NictheNZer again, such a refreshing change to see at least one other person in NZ isn’t in thrall to M Friedman and all that monetarist claptrap.
10. Enough is Enough 10

    10 October 2019 at 10:41 am

    "But the incident should, in a perfect world, end for ever the claim that National is somehow a better manager of the economy than Labour is"

    I am not sure I follow your logic. Any government can produce a surplus. You simply reduce spending and increase taxation. A surplus on its own does not prove anything at all.

    The US economy has been booming over the past two years on the back of a massive federal deficit. The New Zealand economy is fairly sluggish at the moment on the back of a fairy substantial surplus.

    I would prefer to see the surplus being used to stimulate the economy, rather than being used by the economically illiterate to compare themselves to the Torys.
    • Nic the NZer 10.1

      10 October 2019 at 5:47 pm

      Actually its not always possible to create a surplus. There is a feedback loop between govt spending and taxation related to how well the economy is doing. Sometimes (look at Greece around 2010) the cuts to govt spending also shrink the economy and govt revenue and the deficit widens (not shrinks or becomes surplus). So not only is it not always possible, sometimes its a terrible idea to even try.
    • Pat 10.2

      10 October 2019 at 7:06 pm

      when examining the US economy it is important to remember it is the worlds reserve currency and ultimate safe haven

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