The magical disappearing surplus

• mickysavage
• 9 years ago
• Categories: bill english, budget 2014, Economy, election 2014, john key, making shit up, national, same old national, spin, you couldn't make this shit up

John Key and National have placed a huge amount of political capital in returning the country’s books to surplus.  Back in 2008 they campaigned heavily on how Labour was going to deliver “a decade of deficits” and it really was the slogan de jour.  According to them Labour’s mismanagement of the economy was the cause of the global financial crisis and not the pure unadulterated greed of a bunch of merchant bankers like Key seeking never ending wealth.

That always annoyed.  Helen Clark and Michael Cullen had always run a tight budget, produced nine, read that again, nine budget surpluses during the term of the fifth Labour Government, had paid off debt, put ACC on a more secure financial footing, had created the Cullen fund and had put away funds for the time that things went pear shaped.

At the time of the 2008 election the Global Financial Crisis was already causing havoc and no matter who was in power it was the right thing to do to open up the chequebook.  To be fair to National the Christchurch earthquakes have certainly put considerable pressure on the country’s finances.  But Key and co have created this illusion that they are sound financial managers.  And this illusion needs to be shown for what it is.

If you google search the word “surplus” on John Key’s own website the results suggest that he has used the word “surplus” 1,280 times in reported speeches and press releases.  And some of the quotes and passages are real doozies.  Like the following:

• August 2011 – “In only three years we will be one of the first developed countries back in surplus.  After that, we will be repaying debt while other countries keep borrowing.”
• October 2011 – “An earlier return to surplus gives future governments more choices, and National is focused on that goal”
• November 2011 – “We are committed to getting back to surplus in 2014/15 and that significant challenge will require ongoing spending restraint across the public sector and a focus on innovation and results.”
• January 2012 – “Mr Key said that the Government’s focus on responsibly managing its finances includes a commitment to return to surplus in 2014/15 – which National campaigned on at the election.”
• April 2012 – “Getting back to surplus is a challenge but we are making the decisions required to get there, so that we can pay down debt and have more choices about what we want to do.”
• April 2013 – “We remain firmly on track to reach surplus in 2014/15.”
• May 2013 – “New Zealand’s economy is in good shape.  The Budget confirms the Government will get back to surplus by 2014/15.”
• January 2014 – “After much hard work, the Government is effecting a remarkable turnaround in the books, with the latest forecasts showing a budget surplus in the next financial year – 2014/15 – after which government debt begins to fall.”
• May 2014 – “A $500 million support package for families and children, dividends from a growing economy, and a track to surplus next year are all features of Budget 2014.”

Even the 2014 election campaign material continued this theme that a surplus was just around the corner.  Remember this?

Since National came into government, we have been working towards achieving a surplus in the 2014/15 year as well as reducing debt.

But the earlier euphoric confidence started to wear off after the 2014 election.

• October 2014 – “The Government is focused on returning to surplus.”
• January 2015 – “The Government is working towards a surplus and repaying debt.”

This week Bill English (note it was Bill and not John) was forced to admit the bad news.  Despite all the promises, despite all the shenanigans such as cutting funds from the Christchurch rebuild, recategorising grants to Auckland Transport as loans and hanging onto ACC surpluses, despite all the rhetoric National is going to fail.

In reality not reaching surplus this financial year is not such a big thing. Economies tend to be cyclical and a good government will save during the good times and spend up during the bad times.  But when you promise for so long with such confidence that you will achieve a result and you then fail to deliver you deserve all the cynicism and opprobrium that opposition parties can muster.

Remember the decade of deficits?  We are over two thirds of the way there and the end is not in sight.