Remember ‘ambitious for New Zealand’? Remember ‘brighter future’? At what point did all that get replaced with ‘surplus by 2014/15’? Key and National used to at least say they wanted to do something significant, even if they never had the policies to achieve it. Now, they’re fixed on a simple accounting goal – one that anyone could match.
Whether a government posts a surplus or not in a given year is entirely within its own control (providing it retains the confidence of Parliament). Staying on track to reach some kind of surplus in 2014/15,is a simple matter of looking at Treasury’s projections for revenue and spending, which show you’re nearly on track anyway, and tweaking – a little more tax here, less spending there – to make the OBEGAL greater than zero in 2014/15 (if you’re smart, you would leave a bit of a buffer, given Treasury’s wild over-optimism under National).
And – ta da! – you’re on track to surplus.
But what have you really achieved?
It’s worth remembering that a $250m surplus is closer to a billion dollar deficit than a $2 billion surplus – passing the zero point in and of itself is of no particular significance in the real world beyond National’s spin.
A billion either way is just a drop in the ocean of borrowing that National has undertaken in this country’s biggest ever borrowing binge, much of which the Debt Management Office has to refinance each year. So, a small surplus leaves us no more of less exposed to shocks to the international credit system than a small deficit.
Frankly, with the government borrowing at a record low 3.6% there’s never been a better time to take on some extra debt – if you have something useful to do with the money (like using it to fund worthwhile capital investment, rather than using the revenue gained from selling assets that are returning more than 6% a year in dividends).
And that’s, perhaps, the most disturbing aspect of National’s obsession with the 2014/15 surplus. Its purpose is to paper over the lack of anything useful – any policy programme for real jobs, growth, and economic rebalancing.
Sure, there’s a couple of dirty deals like the pokies for convention centre deal but there’s nothing to provide the 30,000-40,000 new jobs year on year that the economy needs to get unemployment back down to pre-National levels. National promised 36,000 new jobs last year but, with no policy to deliver them, it achieved only 20,000 (interesting how it’s all ‘we’re going to create X many jobs’ when the promise is made but when they don’t appear it’s ‘the private sector creates jobs, not the government’).
There’s also no policy that’s going to lift the country’s growth rate above the pitiful 0.1% per quarter National has averaged so far – Rob Salmond points out this is among the lowest in the non-Euro OECD and well behind Australia, the US, and Canada.
The current account deficit is getting worse while another housing bubble is forming – a clear sign that capital investment is, once again, being directed at house price speculation rather than the productive economy – caused, at least in part, by National’s tax cuts for the rich. What will be in this Budget to do anything about it? Nothing.
The Nats used to talk about ‘line by line’ reviews of the government’s revenue and spending but, the fact is, it has changed little of the big revenue and spending items and what it has changed it has changed for the worse – borrowing $2 billion for the ‘fiscally neutral’ 2010 tax package, $1.7 billion in subsidies to carbon polluters, $400 million for unsustainable irrigation, cutting R&D funding, $14 billion for highways that don’t make sense, increasing the cost of getting an education – from ECE to tertiary, and increasing class sizes.
Will any of those poor quality decisions be reviewed? You know that they won’t be.
National has $70 billion a year to play with to better this country and the best thing they can come up with is making sureoperating revenue exceeds its operating spending by about half a percent in three years time.
How’s that for ‘ambitious for New Zealand’?
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