No surplus for you!

Written By: - Date published: 11:17 am, June 15th, 2012 - 14 comments
Categories: debt / deficit, Economy - Tags:

National has reduced the multifaceted, extremely complex job of economy management to a simple bookkeeping goal: a surplus, whatever its size, by 2014/15 (usefully, we won’t know if it has happened until after the 2014 election). Treasury came to the party, projecting a $200m, 0.08% of GDP, surplus for 2014/15 in the Budget. Now, the Reserve Bank’s projected a 1.1%, $2.5b deficit. Oops.

The difference comes down to growth assumptions. Treasury sees more growth in the next 3 years than the past 8. The Reserve Bank’s Monetary Policy Statement sees cumulative growth a third lower than that. Interestingly, its long-run growth assumption is 0.3-0.4% per quarter, half of Treasury’s and basically at the level of population growth.

All up, the Reserve Bank projects nearly $5b extra borrowing than Treasury did just a couple of months ago – pushing net debt above another arbitrary National target, 30% of GDP.

The sad thing is that National says it is more optimistic than Treasury and the reality is that the Reserve Bank is probably too optimistic. And, because National has set that surplus target as the holy grail, it will use more economic under-performance as a justification for further cuts to public services. Never mind the fact that National’s tax cuts for the rich and wasteful spending on subsidies for polluters is at the heart of the deficit.

14 comments on “No surplus for you!”

  1. Socialist Paddy 1

    Only a bunch of pillocks would believe that a miniscule surplus in two year’s time is a sign we have reached nirvana.
    You never know, the way they are going it may occur, but at that time people can look around and see what a fecked up place New Zealand has become and they will then wonder why they let a bunch of tight arsed cost accountants wreck the country.
    Only then it will be too late.  There will be a mass of unemployment and misery and New Zealand will be stuffed.

    • Lanthanide 1.1

      Only a surplus of $4B+ without (further) gutting of the social safety net and other provisions in this country is anything to be particularly happy with.

      The government claiming a surplus of $200m is pretty much useless because they’re just going to spend all of it any way. It’s only ‘truly’ a surplus if it isn’t spent and is therefore used to pay back lending, exactly as Cullen did.

  2. Herodotus 2

    Unfortunately both labour and national buy into these 2 govt agencies. Remember the election last year where both parties were engaged into making us believe that they could achieve in 2014 a surplus, both parties depended upon creating 170,000 jobs. That was never going to happen and any govt surplus was for me a display that neither party had any idea on our economy.

    • bbfloyd 2.1

      Get your facts right little hero…….labour were stating repeatedly that the return to surpluses under their policies was going to be at least a year after the nats said they would… (which has now proven to be a fiction considering the insane policy program they have now “uncovered” as their true intentions)…..

      can you show anyone where, and when, the labour party Ever mentioned creating 170,000 jobs?

      I know you can’t…..You know you can’t….. stop telling silly lies…. you insult peoples intelligence at the same time as exposing your utter lack of moral fibre….

      I could assume you are thick enough to think no-one would spot the obvious attempt at transference,
      but i don’t need to assume that… the proof is on the page right there…..

  3. Dr Terry 3

    There is one answer. For goodness sake, support the Greens!!

  4. Blue 4

    There is some delicious irony in the Natz goal of getting a surplus, any surplus, when they bashed the crap out of Michael Cullen for running a surplus and paraded it as evidence that taxes were too high and needed to be cut.

    Guess surpluses look better when you are being forced to borrow shitloads of money from overseas and pay interest on it because you put a giant fucking hole in the country’s tax revenue in the midst of a global financial crisis.

  5. Craig Glen Eden 5

    So true Blue English and Key use to wail when Cullen used the surplus to pay back debt. Tax cuts tax cuts they cried, now what do they do but give tax cuts thats created debt. So much for good economic management, they are a very sick joke that only cause pain.

    • Herodotus 5.1

      Government debt never reduced !!! So then debt was NOT repaid. Govt debt remained around $37b
      Just another case of “if you keep telling a lie that it becomes accepted as truth.”

      • Simon Poole 5.1.1

        What on earth are you on about?

        Even Fairfax has shown that crown debt reduced under Labour.

        In 2008, gross debt was 17.2% of GDP, net debt was 5.6% of GDP, and core crown debt was $10.3b

        In 2002, after one term of Labour govt, those numbers were 28.8%, 20.0% and $25.3b.

        In 2011, after one term of National govt, we have a gross debt 36.2% of GDP, net debt of 20.0% of GDP, and core crown debt of $40.1b.

        If you are still willing to pin that one on Labour/Cullen, ask yourself this: Did Labour introduce big spending programs like interest-free student loans and WFF? Yeah, they did. Did National keep those programs while slashing the taxes that paid for them? Yeah, they did. Who then is responsible for the debt?

    • Herodotus 5.2

      Craig net debt may have reduced but not gross. And thanks to some magi al accounting treatment even net debt quoted is questionable, the value of student loans (currently $14b, yet from winny peters only about 50% is collectable) the value of fines outstanding. The one thing that is known is the liabilities will not become less than reported in the govts balance sheet

      • ghostwhowalksnz 5.2.1

        The value of fines outstanding ???

        Did you slip on the ice this morning

        • Herodotus

          Within the govt accounts such items as outstanding parent support payments outstanding fines and penalties are included. Even though the ability to collect these has doubt

  6. Herodotus 6

    Try this then but change the parameters that default. Funny how Dent remained constant

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