Bernard Hickey is essential reading. Particularly so as one of the precious few commentators who is prepared to call Key on his bullshit, as he does today in The Herald:
Bernard Hickey: Show us the money, John
So which Treasury forecasts should we rely on, Prime Minister?
Next week Treasury is expected to unveil a bountiful set of Budget surplus forecasts for the next four years that allows us to have it all – tax cuts, extra social spending, two major quake rebuilds and debt repayment.
Key has very literally claimed that the government will “do it all”. Back to Hickey…
But Key’s reliance on those forecasts for some big talking certainly jarred just two days after he rubbished the Treasury’s forecasts in its Long Term Fiscal Outlook delivered last week. Under the same Public Finance Act, the Treasury has to forecast at least once every four years what the Government’s books will look like by 2060 if it continues on with its current settings.
Treasury pointed out for the third time in the current National Government that an ageing population allied to the current settings for New Zealand Superannuation would blow out the Crown’s net debt to over 200 per cent of GDP by 2060 from 25 per cent now.
The Treasury warnings were exceptionally forthright – Brian Fallow: Future written in red ink – but back to Hickey…
Key had not forgotten when he was asked if he was betting his legacy on Treasury getting its long term forecasts wrong.
“I’m telling you it’s a load of nonsense, because they can’t get predictions in 44 days right, let alone in 44 years.”
It is extraordinary for the Prime Minister to call the Treasury’s short and long term forecasts a “load of nonsense” and yet rely on the medium term ones to promise all manner of riches to voters on the eve of an election.
Nailed it right there.
Treasury’s forecasts are worthy of respect. Key may well be right that the Government can afford it all for the next few years, but if that was the case it should also address those longer term challenges evident in the Treasury’s long term forecasts.
Key doesn’t give a stuff about long term problems.
One way to credibly address the issue is to use the good times now to prepare for the longer term challenges. As Labour’s finance minister Michael Cullen resisted Key’s calls from 2005 to 2008 for big tax cuts and instead set up the New Zealand Superannuation Fund and KiwiSaver.
And there you have it. But a mass of other “opinion” writers prefer slick bullshit to competent government. They do us all a disservice.
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