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NRT: So much for the surplus

Written By: - Date published: 1:21 pm, July 8th, 2014 - 40 comments
Categories: debt / deficit, Economy, jobs, treasury, wages - Tags: ,

Reposted from No Right Turn.

Back in May, National promised to balance the books next year. Now it looks like that won’t be happening:

The Budget deficit was tracking $332 million worse than forecast for the 11 months to the end of May, throwing doubt on the forecast 2014/15 Budget surplus.

Treasury said the budget deficit excluding gains and losses (Obegal) was $1.1 billion against $770m forecast in the May 15 Budget update, due to softer than expected GST and corporate tax returns.

Officials said it was too early to know the likely impact of these results “on the current and future financial years as both downside and upside risks exist “.

The Government has been promising to deliver a Budget surplus, and the May Budget forecast a surplus for the 2014-15 year of $372 million, well ahead of the paper-thin $86m tipped in December.

So, I guess we can expect some arbitrary cuts so National can claim its victory. What’ll it be? School maintenance? Maybe they’ll kick the poor some more. But the one thing they won’t be doing is fixing the revenue side of the budget by increasing taxes on the rich – that apparently is unthinkable.


40 comments on “NRT: So much for the surplus”

  1. dv 1

    But the one thing they won’t be doing is fixing the revenue side of the budget by increasing taxes on the rich – that apparently is unthinkable.

    Nope raise GST to 20%

  2. mickysavage 2

    And business confidence, although still high, is falling.

    From Radio NZ (http://www.radionz.co.nz/news/business/249220/business-confidence-falls):

    The Institute of Economic Research’s June quarterly survey of business opinion found a net 33 percent of firms expect economic conditions to improve, compared with a net 52 percent in the previous period.
    Trading activity, which the Institute said closely mirrors economic growth, eased back, and indicates annual economic growth of 2.8 percent.
    Activity overall remains robust, but momentum has eased in some rural regions and Auckland, which the Institute attributes to the impact of falling dairy prices on rural incomes, and slowing growth in Auckland’s housing market.

    Although it is still relatively healthy there is nothing more likely to hit a government’s popularity than a drop in confidence.

    • Colonial Viper 2.1

      Business people are optimists, inherently. The key thing however is that even at what has been seen as solid levels of business optimism – it’s not that solid: in most parts of the country it has not flowed into additional capital investment and increasing headcount. More of a “wait and see” attitude.

  3. Jrobin 3

    Good news, also house prices are slumping in Auckland which though actually a good thing, will demoralise those who bought at the top of the cycle. Interest rate rises, power price rises, no surplus, falling dairy prices. Not really a rock star at all.

    • Lanthanide 3.1

      It was a Beiber-economy, not a Jagger-economy.

    • Tracey 3.2

      slumping is a bit of an overstatement

      from QV

      The Auckland market has increased 12.3% year on year and values are up 31.4% since 2007.  When adjusted for inflation values are up 10.6% over the past year and are 12.8% above the 2007 peak.

      Andrea Rush QV National Spokesperson said, “The nationwide index is still increasing but the picture around the country is mixed.”

      “Residential property values in Auckland and Christchurch are still increasing at a similar rate to what they were in June last year.”

      “While values in Wellington and Dunedin are showing a downward trend this month, as are a number of other provincial centres around the country.”

      “Sales volumes and home loan approvals (new and existing) are also down considerably at between 15-20% less than at this time last year.”  



      The Auckland region as a whole has increased 2.7% over the past three months and 12.3% year on year.  Manukau East is up the most with values increasing 4.3% over the past three months. Followed by the North Shore – North Harbour where values have risen 4.2%. While in Waitakere City values rose 2.3% over the same period.

      QV Valuer Bruce Wiggins said, “We are seeing a gradual reduction in the rate of growth in property values in some areas and more sellers opting to put on an asking price or sell by negotiation.

      “However, sale by auction remains popular in high value areas or where there are special characteristics.”

      “The gradual reduction in growth  is particularly noticeable in ‘hot spots’ such as Waitakere, which was up more than 17% year on year a few months ago and is now showing a 15.2% increase year on year and Papakura, where values are also flattening off.”

      “Land-banking remains popular in North-West Auckland where there are a number of new subdivisions currently being undertaken and more are planned.”

      “Within Flat Bush there appears to be a flattening of prices in recent times. This may be due to a number of builders/developers who bought land on terms at around the same time completing construction with the new builds appearing on the market at similar times.  This can create an over-supply and may affect values somewhat there.”

      • ropata 3.2.1

        yes it’s a two-tier economy. property owners / investors/ developers vs everyone else.
        it is indicated by year on year price increases exceeding the median wage
        it is a bubble, sustained by speculators and wealthy immigrants
        and it’s forcing the poor/young out of the market

        Australian houses are more affordable(!), because they have effective unions, capital gains tax and controls on foreign ownership

      • vto 3.2.2

        Tracey, the number to watch is sales numbers, not prices.

        The things you quote above refer optimistically to various price and value increases but the giveaway sentence, just the one, is this one …

        “Sales volumes and home loan approvals (new and existing) are also down considerably at between 15-20% less than at this time last year.”

        Sales volume is the one to watch.

        • mickysavage

          Yep volume decrease precedes price decrease. It is the first sign the bubble may be popping.

  4. Paul 4

    well, ole’ Johnny’s confident, as reported by his slavish propaganda machine aka. the NZ press…..http://www.stuff.co.nz/national/politics/10243719/Key-confident-about-surplus

    • Paul 4.1

      Just imagine what the headline would have been had Labour or Green been in power….

    • Hanswurst 4.2

      Yes, why do all journalists seem to report the reality according to John Key? How about a headline along the lines of “Key a Complete Stupid Dick – Successful Businessman”? I mean, surely they don’t have to look too hard to find some businessman somewhere who thinks our PM’s an embarrassment, just like they found some random mother of two the other day who was lukewarm on Labour’s education policy. They could even provide a bit of balance a couple of lines from the bottom of the article with a single sentence pointing out that said businessman supports all of Key’s policies, and that his being a dick is mainly on account of not being able to speak properly, and making naff jokes that he practises for hours in front of the mirror, but that even your least favourite uncle would be ashamed of.

  5. Sable 5

    Yes well that’s what happens when NZ journalists take the opinion of HSBC financial analysts and report it as unquestionable “fact”. The NZ economy is stuffed and its getting worse whilst Australia seems to be getting better (assuming Abbott doesn’t stuff it up which is very likely).

  6. bad12 6

    All part of the ‘swindle’ is how i see it,

    The back in black hype of English’s 2014 budget was just that ‘Hype’ with a capital H and a large serving of complicity from the media,

    When you look back a bit, 2013, you see stories of public debt ‘peaking’ in years 2016/17,


    That suggests that English knew the borrowing would continue way past the ”books back in black” bullshit of this years budget,

    Even the Herald says the same in this years budget coverage, in the one breath its ”the balanced budget”, turn the face the other way, and a couple of paragraphs later we have the same ”debt will peak in years 2016/17”


    It’s a swindle, one of those card tricks done right in front of everyone’s face, the headline yells ”books back in surplus” the rest either doesn’t sink in or the people don’t bother to read the whole story…

    • One Anonymous Bloke 6.1

      A swindle? It’s a Sex Pistols economy.

      • bad12 6.1.1

        i am assuming that English and Slippery are gambling lots on a third term, the fiscal gap would be plugged with a drip feed from the asset sales cash and an empty bank account dripping in red ink will be the legacy…

  7. ropata 7

    the economy is great if you happen to be a hollywood mogul, or chinese/russion oligarch, or multinational corporation looking for a small country to buy

  8. Jepenseque 8

    Gee fair bit of negativity here! You get the sense those on the left would love a good bit of failure for little old NZ! Fact is that tax reciepts are notoriously volatile, there are swings and roundabouts but the trend is clear. Tax up 4.6% year on year. Well done all the workers and business owners out there. Cheers

    • One Anonymous Bloke 8.1

      Nine years of surpluses means the left has the ground from which to criticise, not to mention the economic competence and lowest unemployment rate in NZ history. Cheers.

    • Tracey 8.2

      gee you havent known negativity until you were online during year after year of labour surpluses, the right could still see the sky falling

  9. Tamaki 9

    Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.

  10. Deemac 10

    Maybe rock star economy because there are a few very rich people at the top while the masses can only watch?

  11. dave 11

    Log and milk powder prices tumbling interest rate on the rise ,housing bubble yes this rock star is past it used by date i wonder if there will be a credit down grade you would have to think so

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