The future is already not so bright

Written By: - Date published: 9:02 am, December 6th, 2011 - 33 comments
Categories: debt / deficit, tax - Tags: ,

So, one week after the election and extra rosy Treasury is already rowing back on its predictions.

The deficit is widening as tax takes are down.  By $131 million in July-October.  The operating deficit was $7.45 billion, almost 20 per cent worse than forecast in the pre-election fiscal and economic update.

Cheer up Bill English:

“the local economy is continuing to grow, with higher than forecast corporate tax revenue,” Finance Minister Bill English said in a statement. “But getting back to surplus won’t be easy. In many ways, restraint in the public sector has only just started.”

By ‘restraint’ read ‘job losses’.

Oh except, that growing local economy?  Treasury is downgrading their forecasts there too.  As did the OECD did last week, when the NZIER also cut their forecast growth to 1.5%.

John Key is typically relaxed and optimistic.  I guess we’ll just have to see how far that gets us.

33 comments on “The future is already not so bright”

  1. ghostwhowalksnz 1

    20% worse than the Prefu ??

    This is practically unbelievable . Could Keys optimism have ‘infected’ the Treasurys numbers ( again)

  2. Colonial Viper 2

    I’m predicting that final growth predictions will settle in the 1.2% to 1.8% range (Treasury at the most optimistic end of that), with the actual print being 1.1%.

    • Afewknowthetruth 2.1

      CV

      Don’t forget that Treasury forecasts are done by thinking of a number and then doubling it.

      Get hold of a copy of your local authority 10 year community plan and see if it has the same ludicrous graph (generated by Treasury) that NPDC has.

      The economic growth trend has been downward for years. But Treasury doesn’t like graphs that show the wrong ‘reality’ so they draw the future section of the growth graph with an inexplicable (and unexplained) sudden upturn… almost literally just like this V.

      I guess it’s all to do with satisfying the international bond markets and ensuring that NZ can be got deeper into [unrepayable] debt, so the IMF can dictate future austerity packages and privatise remaining assets.

      • Draco T Bastard 2.1.1

        But Treasury doesn’t like graphs that show the wrong ‘reality’ so…

        hah, reminds me of the IEA’s graph of oil production after they admitted Peak Oil in 2k5/6 which was suspiciously flat after the peak due to “fields yet to be found”.

        • Peter 2.1.1.1

          Yeah, that and the double counting of oil that gets used to make other oil. That’s the only reason that the liquid supply has been supposedly increasing in the world for a few years.

      • Ari 2.1.2

        Treasury doesn’t pull their numbers out of their asses, they spend a lot of work on being as idealogically wrong as possible, and really, achieve quite remarkably accurate results despite the incredibly wrongness of their premises, lol.

    • mik e 2.2

      you left out the – 1 to 3% decline in economic activity CV thats my bet any other predictions lets start a sweepstake!
      Blinglishs Austerity program will wipe out any chance of growth in a declining world economy that will mean commodities will be worth less.Like Keys promises.

  3. Glenn 3

    The future of our country is dire. ..Growth is slowing and we depend on borrowing to retain our living standards.
    This article is worth reading…And quite frightening.

    “Neville Bennett is worried that we are grossly underestimating the impact of the economic trends moving against us…..

    Government says it is OK for NZ to have deficits at a time when sentiment has moved against them in the UK, US and EU. According to Treasury, the 2011 budget had an operating balance of -8.4 %. That was the budget position but there may have been minor changes.

    In the EU, countries have signed up to limiting deficits to -3% of GDP.

    But meanwhile, Greece has a fiscal deficit (-6.8%) much lower than New Zealand’s but it cannot borrow in overseas markets. Greece is frozen out of international markets because its sovereign debt has junk status.

    ‘Question the assumptions'”
    http://www.interest.co.nz/opinion/56997/neville-bennett-worried-we-are-grossly-underestimating-impact-economic-trends-moving-a

    • Georgecom 3.1

      Was it wise to reduce income taxes in recent budgets when a large fiscal deficit remained?

      Reading the Neville Bennett comments, it struck me that Key and English are practising W Bush economics.

      Either incredibly naive, incredibly ideological or incredibly reckless. After totally failing to read the economic tea leaves post 2008 all those 2 have left is seemingly to cross their fingers and hope. Perhaps the saddest part is that the public voted this type of economic ‘expertise’ back into power.

      • ropata 3.1.1

        “Key and English are practising W Bush economics.”

        Very true Georgecom. Another Bernard Hickey piece worth reading : Devil S Advocate says now is the time to borrow heavily to buy property

        NACTional are following the US prescription to create a sub-prime mortgage mess.
        1. Rubbish the sensible idea of capital gains tax
        2. Tell people to buy as much house as possible since housing prices never fall
        3. Lower the lending standards
        4. Set up your property developer mates with cosy land banking schemes
        5. Sit back and watch the entre mess implode….

        This is all about a racket that delivers obscene, lotto win type capital gains to the owners of land favoured by “the plan”. This feeds through to inflated prices of ALL housing, hence a constituency formed against reform. The young are just prey for the fiscal child abusers that their parents generation has become.

        Judging by the election result, we won’t get a CGT until the IMF forces us.

  4. Jackal 4

    As well as not being able to do basic maths… treasury misread Keys instructions that said there was going to be a blighted future. Doh!

  5. Afewknowthetruth 5

    Ben.

    ‘cut their forecast growth to 1.5%’

    This surely is wonderful news!

    Bearing in mind that economic growth is akin to cancer, rather like a deadly disease that eventually kills its host, the slower we grow the better off we are!

    Once we get to the stage of negative growth (that shouldn’t be long, now that we are on the downside of Hubbert’s curve) we will really have something to celebrate.

  6. I found this great blog this morning which I though some of you might enjoy: Psychopathic economics 101

    • mike 6.1

      Good stuff.

    • Akldnut 6.2

      Psychopaths used the following five weapons to take control of our global economy:

      Political Economic Capture.
      Scholarly Economic Capture.
      Statistical Economic Capture.
      Mainstream Media Economic Capture.
      Regulatory Economic Capture.

      Wow that could quite easily be a speach from Key to the Nat faithful
      NATIONAL used the following five weapons to take control of our New Zealands economy:

      Political Economic Capture.
      Scholarly Economic Capture.
      Statistical Economic Capture.
      Mainstream Media Economic Capture.
      Regulatory Economic Capture.

      “”Rah rah rah applause & cheers all around. (from the audience)

  7. Tigger 7

    Housing still hasn’t collapsed…but it will.
    http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10771182

    This is really going to hurt.

  8. Zorr 8

    Everything seems sunny as long as you believe it shines out your arse…

  9. Dr Terry 9

    Take to heart the precise words of Bill English, “restraint has only just STARTED”. Wait and see, this government is already starting in direful manner!

  10. Tom Gould 10

    Of course we are in for a brighter future, just read the papers.

    Latest example. Headline ‘Maersk blames strikes, pulls one Auckland service’. But Maersk did not blame strikes. When asked, they said it ‘played a part’ but the dude running Tauranga, where the service has moved to, says they have been ‘working for some time’ to attract them across. So they headline is complete garbage. Made up for political purposes by a Tory MSM. They story says the opposite.

    So Ben, you don’t actually have to have a brighter future, just be told often enough there will be one.

  11. Roy 11

    John Key is relaxed and optimistic because his wealth is safe and he doesn’t give a rodent’s derriere about the rest of us.

    • gnomic 11.1

      Ah yes, I think you’ve got it. The smirking weasel has no skin in the game, as long as he remains fully vested. After completing the agenda his controllers gave him, he sods off to Hawaii for the duration. His minders protect him from the angry mob, should one emerge after the austerity programme is fully implemented, and weasels don’t give a cuss about their role in history, assuming there is any after the deluge.

  12. exitlane 12

    Treasury and NZ economists downgrade “growth” forcasts…..what took them so long? We are witnessing the end of “growth” at least as measured by the absurd measure of GDP

    Watch listen and learn with this wee gem of a video   —  just 5 minutes
    the proposition is taken further  here from a NZ perspective

  13. hoom 13

    Look, economic forecasts by Treasury are like state of the environment reports by internationally respected environment scientists, you show me a negative one & I can make a quip about being able to show you two positive ones but will never be challenged to actually front up with one to be peer reviewed.

    • Draco T Bastard 13.1

      Did you have a point in that comment?

      • hoom 13.1.1

        It was a reference to the Hardtalk interview where Key equated Mike Joys’ report on state of the NZ environment with a simple lawyers’ opinion & the way that Key never gets challenged to provide sources/proof.
         
        Perhaps a bit obtuse I guess 😮
         

        • Colonial Viper 13.1.1.1

          you got DTB with that! 😀

        • gnomic 13.1.1.2

          Ah, dictionary police here. For ‘obtuse’ should we perhaps be reading abstruse? Obtuse means thick, while abstruse is hard to understand or profound. Just sayin’.

  14. anne 14

    Treasury just play with marbles in their pockets to decide what the numbers are,a wasted space really,they should all loose their jobs because their estimates are always so far off the mark.
    When are politicians going to see that to have an economy that is vibrant you dont hang it out to dry,by cutting services,jobs etc.
    NZ’ers need to call for all politicians to take an instant salary cut,cut the politician numbers to
    around 60 by taking some from each party,so there is a fair representation,cut all perks for politicians,allowances etc,big savings to be made here.
    Politicians get their own way to work like everyone else,no minders,no staff,no bmw’s,if there
    is going to be pain for everyone at their hands,then they need some medicine as well.
    As i have said before on other posts there is billions of dollars to be made from untaxed income
    going off-shore $20-$40 billion,probably more,that could be comming into the coffers,a capital
    gains tax would capture untaxed profit from banks,business,private,corporations etc,why not
    do it? what is the problem? or does key think that these entities add value to the economy by
    just being here,is that by paying staff peanuts so that they can take the lions share untaxed off-shore, jk and national do not have any answers other than to kick the guts of the population where it hurts and keep on smiling and waving,until its leader’s face is turned away from the public eye, then plotting where and how the next boot is going to land.
    If there is a god,he will be looking down and organising those special votes to stop key and
    national from governing,thats all we can hope for now.

    • gnomic 14.1

      ‘Politicians get their own way to work like everyone else,no minders,no staff,no bmw’s,if there
      is going to be pain for everyone at their hands,then they need some medicine as well.’

      Erm, I don’t think you quite understand. These are not ‘ordinary people’ as the great (briefly Prime Minister) Geoffrey Palmer once called the rest of us, but the elect. In many cases they have given up extraordinary prospects of financial gain to serve the public. Surely the tiny remuneration and perks they receive are scarcely enough to get them up in the morning. And if we had any doubts on this score there is some sort of seemingly independent commission to make sure the people’s representatives get their due by comparison with other beings of great moment. In any case, all this is mere chickenfeed compared with the rewards on offer to our real rulers, the chief executives, directors, and managers of the globalist corporations. Don’t get me started on hedge funds. At least the hedgies can lose big time if their guesses are wrong.

  15. Since the brightness of the future is going to be determined by the development of the current capitalist crisis here’s a good commentary on the real causes of the widening inequality between the 1% and 99% by Michael Roberts
    http://thenextrecession.wordpress.com/2011/12/06/inequality-poverty-and-riots/

  16. Deadly_NZ 16

    Well I suppose we could always hope that not all the NACTS are heartless monsters, and may even have a conscience, well a newby or 2 and would maybe cross the floor. Now that would be interesting.

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