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The surplus lie

Written By: - Date published: 10:30 am, May 14th, 2015 - 68 comments
Categories: bill english, budget 2015, economy, john key, national - Tags: , ,

(Originally posted at Boots Theory)

Andrew Little delivered his pre-Budget speech in Wellington yesterday, and the pullquote everyone’s talking about was some seriously no-nonsense stuff:

…[National’s] promise was clear. Their good economic stewardship would see us in surplus.

And now they’ve abandoned their promise.

National’s talk now is about how achieving surplus was an “artificial target” and that getting a surplus is “like landing a 747 on the head of a pin.” A lot of effort has gone into glossing over the broken promise. But I see it for what it is – one of the biggest political deceptions in a lifetime.

You can quibble the semantics, of course – is it not really a lie if Treasury figures predicted we’d be in surplus? Or is it still a lie because Treasury’s predictions are often laughably optimistic and wrong (when National is in power, anyway)? But come on, whose word can we rely on regarding the Budget if not Treasury’s?

The room to quibble is what makes it a lie.

Balancing a government budget is nothing like balancing a chequebook, and not just because ordinary citizens can’t print their own money at will. There are so many moving parts, so many tricks, so many points which can be manipulated ever so slightly

That’s why it was ridiculous for Bill English to say even a $1 surplus would count as “significant“. When you’re managing nearly $100 billion in revenue and spending, there’s infinite room to tinker. You can make all kinds of assumptions about how much tax will be collected. And we’ve seen the tinkering: the delay in lowering ACC levies. The interest-free “loan” to the NZTA which conveniently counts as an asset, not spending. The assumed cuts to EQC’s insurance liabilities.

The lie isn’t really about whether-we-achieve-surplus or whether-we-don’t. The lie is everything that National’s constant promises of surplus implies: that a surplus is objectively good; that a surplus proves their superior economic management abilities (but a deficit is all Labour’s fault; they had nine long years to deliver surpluses for Bill English); that a surplus proves things are back on track, the economy is doing fine, things can’t be that bad – so obviously inequality’s a myth, there’s no housing bubble, Christchurch is hunky-dory, we don’t need state houses or workers’ rights or any of that rubbish, and if you’re very, very good you’ll get jam tax cuts tomorrow.

A surplus proves National are right about everything.

That’s the lie we’ve been sold, time and time again, by this government. And given the harm it has done and is doing to the New Zealanders who can’t afford a first home, much less an investment property, who can’t find secure employment or buy the kids a new pair of winter shoes, who are living in cars and queuing for foodbanks at 3am – I don’t think it’s too strong to call it one of the biggest political deceptions of our lifetime.

68 comments on “The surplus lie”

  1. Enough is Enough 1

    You are correct that the lie is everything that National’s constant promises of surplus implies.

    You can always spot a simpleton. He is the one who assesses the success of a government by saying a surplus means good, a deficit means bad.

    When an economy is struggling, tax take falls so it is absolutely necessary to run a deficit to maintain the same level of expenditure. That is the correct thing to do. The government can borrow cheap cash so that the wider economy does not suffer as much as it otherwise would.

    Likewise when the economy is firing it is the correct to run a large surplus so as to take money out of the system and not over cook the economy.

    The Nats don’t quite get that though. The fucking idiots cut taxes for the rich at the depth of the GFC.

    • Colonial Rawshark 1.1

      The NATs have access to monetary and economic expertise as good if not better than Labour does. The difference is that the NATs are gutsy and unrepentant at using that expertise to benefit their core constituencies.

      • Draco T Bastard 1.1.1

        The NATs have access to monetary and economic expertise as good if not better than Labour does.

        To be honest, I don’t think that’s true. What they have is access to better and better funded PR to promote their ideology of enriching the already rich.

        • Liberal Realist 1.1.1.1

          +1. Nailed it.

          You did leave out #DirtyPolitics but I guess that could be considered ‘PR’, I bet that’s how the Nats would think.

    • Draco T Bastard 1.2

      The government can borrow cheap cash so that the wider economy does not suffer as much as it otherwise would.

      Even better, the government can create money and doesn’t have to borrow at all.

      Likewise when the economy is firing it is the correct to run a large surplus so as to take money out of the system and not over cook the economy.

      And taking money out of the system is what taxes are for.

      The Nats don’t quite get that though. The fucking idiots cut taxes for the rich at the depth of the GFC.

      The Nats don’t get economics and the flow of money and resources at all.

  2. Colonial Rawshark 2

    The second biggest NZ political deception of a lifetime is Labour claiming that our country cannot afford to keep the retirement age at 65. Money is created electronically by keystrokes by the Reserve Bank. How can we run out of money to pay super at 65?

    [Stephanie: this is really off topic. Please take any discussion about the superannuation age to Open Mike.]

    • Murray Simmonds 2.1

      “The Lie” – about achieving a surplus – or not as the case may be – was never really about good economic management. It was all about setting up an economic framework within which National policy could be unquestionably implemented. Policy like welfare cuts – “-because thats whats needed to achieve a surplus.”

      Policy like ignoring underpriveliged schoolkids while promoting charter schools and other forms of privatisation “-because thats whats needed to achieve a surplus.”

      The bullshit frmework of ‘the need to achieve a surplus’ was set up to provide a framework within which the Gnats could push the neoliberal agenda – there’s nothing more than that to it.

    • Colonial Rawshark 2.2

      The lie is everything that National’s constant promises of surplus implies: that a surplus is objectively good; that a surplus proves their superior economic management abilities

      My comment is that Labour pushes the same narrative for themselves. It is about politicians lying through their teeth about the nation’s future fiscal state, and Labour telling the public that we need to cut back on Super to avoid future deficits because of the goodness and importance of surpluses.

      This is a very close parallel to your post.

      • Kiwiri 2.2.1

        Interesting.

        A general question here.

        Where do issues about the retirement age and superannuation sit in the scheme of thinking about the Labour’s Future of Work Commission? Push out the retirement age further, introduce means-testing, make changes to superannuation arrangements, etc etc?

        Not sure who I am directing this to, perhaps it is a rhetorical question, but I will ponder on that. I hope the more knowledgeable and sharper ones here will be able to put forward some really good ideas that are consistent with the Labour Party’s democratic socialist principles.

  3. Puckish Rogue 3

    “I don’t think it’s too strong to call it one of the biggest political deceptions of our lifetime.”

    – Well it’d be behind Rogernomics and Helen Clarks election rort possibly even Ruth Richardsons MOABs

    • Crashcart 3.1

      Can’t disagree with those. Although I would add in John Key saying they wouldn’t increase GST or that ACC was financially in trouble and then last budget saying they couldn’t lower ACC levies.

    • Tracey 3.2

      “one of…”

    • b waghorn 3.3

      The hardcase thing I’ve noticed about you little key lovers is that none of you are saying keys surplus promise isn’t a deception you are only arguing about how dig a deception it is . so at what level do you sycophants say I’ve had enough of creepykeys lies.

  4. dukeofurl 4

    remember the ‘chewing gum’ tax cut from labour. – around 2005 ?

    national laughed that it was such a ‘small amount’ and there didnt have ‘any certainity’ when it would occur.

    Who’s laughing now ?

    • Rob 4.1

      Well actually it was Winston Peters that brought the name “chewing gum” budget, he even brought in a pack of gum into question time to prove the point.

  5. SHG 5

    I don’t think it’s too strong to call it one of the biggest political deceptions of our lifetime

    Am I the only person who thinks that sounds batshit crazy?

    WMDs in Iraq, Ukraine independence, Indonesia in East Timor, Iran Contra, Chilean junta… NZ failing to achieve a budget surplus. Yep, right up there.

    • Yeah, nice diversion. Meanwhile, here in NZ …

      • SHG 5.1.1

        Pointing out that the the parent article’s conclusion is – what’s the word I’m looking for? oh yeah, INSANE – is hardly a diversion.

        • te reo putake 5.1.1.1

          The fact that you don’t understand the conclusion doesn’t make you insane, SHG. It just makes you look sad.

        • adam 5.1.1.2

          Does not context mean anything to you SHG?

          Cherry picking any piece out of context, and you can make it look bat shit crazy. Just look at the Herald on almost a daily bases.

          So your point is SHG? Because if you look at in broad strokes – sure, and cheery picking it – definitely – but within context – your point is?

        • Colonial Rawshark 5.1.1.3

          Agree with you SHG – the deceit around the surplus (and what a surplus means) is major: but first world book keeping problems are nothing on the scale of some of the other issues you have mentioned.

          • Clemgeopin 5.1.1.3.1

            It is still a major deception to fool the people continually for seven years.
            You are sounding like a mouth piece of key, English or of some right wing outfit in the constant opposition you are showing against Labour and Little.

            • SHG 5.1.1.3.1.1

              So say English is failing to deliver on his predictions as a Finance Minister. Say that the National govt is breaking pre-election promises. Great. Then everyone can have a debate over whether or not it happened, if it did whether it was controllable or not, whatever.

              Saying “one of the biggest political deceptions of our lifetime” just makes normal sane people turn off. It makes them go “ok, crazy Labour is crazy, come back when you’ve calmed down”.

              • Colonial Rawshark

                Saying “one of the biggest political deceptions of our lifetime” just makes normal sane people turn off. It makes them go “ok, crazy Labour is crazy, come back when you’ve calmed down”.

                I guess the lefty Thorndon Bubble set sincerely thinks that it really is one of the biggest political deceptions of our lifetime.

          • Peter Richards 5.1.1.3.2

            And this comes from the man who thinks money grows on keystrokes.

    • Matthew Hooton 5.2

      It is certainly desperate.

      Lange and Prebble promising to “save rail”
      Cargill saying there was an $89m surplus in 1990 when there as a $4b deficit.
      Bolger saying surtax would go – “no ifs, no buts, no maybes”

      Just to name three.

      The PREFU said a small surplus was forecast, and that was signed off by the Treasury Secretary. It has turned out to be a small deficit, largely because of lower than expected inflation. That can be attacked as deeply embarrassingly for the govt, but it really isn’t a lie, and certainly not one of the worst political deceptions in a lifetime.

      The Fiscal Reaponsobility Act, now part of the Public Finance Act, means there really haven’t been any massive election lies since the numerous broken promises of 1990.

  6. esoteric pineapples 6

    “I don’t think it’s too strong to call it one of the biggest political deceptions of our lifetime” – in normal (past) circumstances it would be but this government has provided so many examples of big political deceptions …….

  7. Clemgeopin 7

    The lie is not so much that they are unable to produce any surplus for the last 7 years, but their bull shit each year that they have a ‘Rock Star Economy’ and lies they have been peddling each year and during the election campaign last year that they are on track to produce surplus until reversing the position just a few weeks before each budget.

    What Bill English is good at is DDD : Doube Dipping from Dipton.
    and
    What Key is good at is being bad for pony tails. TPPP : The Parnell Pony-Tail Puller.

    Good economic managers? Yeah, right! The buggers need a half hour economic management refresher course with Michael Cullen over some weekend after they have finished their usual dishing of their weekly does of spins, smiles and lies.

  8. “I don’t think it’s too strong to call it one of the biggest political deceptions of our lifetime”

    deserves a special egg-beater-award..

    (and as just one example -i wd pick/cite the clark labour govts’ ignoring/demonising/neglecting of the poorest – for nine long years..(and them a labour govt..(!)..and lab ’14 no better..eh..?..)..

    ..as making that accounting exercise unworthy of mention..

    ..and yeah..rogernomics..’nuff said..?..)

    and that little spent 75% of his speech over-acting his head off/vigorously weilding the beater..

    only shows how out of touch he/labour is with what really concerns most people..

    ..another example of the beltway having its’ head too far up its’
    own arse..

    • in fact it is redolent of the mindless point-scoring that comprises so much of questiontime in parliament..

      ..they do seem to gloat/shriek over the most trivial matters..

      ..and is largely both incomprehensible and irrelevant to most of us mug-punters..

      ..the big-questions..?..what really concerns us..?..not so much..eh..?..

  9. Stuart Munro 9

    I’m not sure I’d want to call it a lie as such, Bill English’s inability to construct a surplus seems to stem from fundamental incapacity rather than clever deception – I guess his wife balances his cheque book for him too. But certainly the myth that National has anything other than freakishly incompetent and corrupt economic management is overdue for an overhaul.

  10. Molly 10

    ” the delay in lowering ACC levies….”
    Being associated with a few people who have been fighting for ACC support over the last few years, we need to reframe the ACC issue.

    Instead of demanding a reduction in levies, we need to be advocating for a return of full service levels to those who have to use ACC.

    This delay is deliberate – soon both progressives and conservatives will be howling for a reduction of levies, and when it takes place – ACC will be effectively gutted and of no use to NZ.

    Private health insurance anyone?

  11. ropata 11

    The lies that sicken me the most were Key’s solemn promises to the disaster stricken communities of Westport and Canterbury in 2011. The government has done sweet FA to help the actual people most affected preferring to give handouts to big business instead

  12. Paul Campbell 12

    What a silly metaphor – of course a surplus can be everything > $0, it’s an enourmous range – half of infinity – the correct quote should be “like landing a 747 on the other side of a pin.” – unless the true goal was to break even, rather than start paying down all the debt National has built up over the past 2 and a bit terms, it should be pretty easy to tell ifr you have a surplus or no

    • felix 12.1

      Yes exactly, it’s utter insanity.

      And he says these things in rooms FULL of journalists, and not one of them blinks.

  13. Nic the NZer 13

    The constant carping on about government surplus is counter productive for the left. If by some miracle the next government is a left wing one, then in order to implement their program it will be necessary for the new government to run an extended (if not perpetual) period of government deficits. In reality this is not a problem, just as its not a problem for the current government to post deficits until the economy is doing much better in general (or even indefinitely). Having got in on the back of criticizing the current governments failure to post a surplus, that is going to look bloody foolish.

    Any government with left wing programs will need to expand substantially government spending and the deficit as a result. Stop carping on about the surplus and start explaining to people that the surplus is a purely political point scoring exercise, which is having substantial negative impacts on the country (e.g inability to deal with the housing bubble, inability to fund public sector programs such as education, health and public transport, inability to raise employment, inability to fund councils properly, over funding of ACC, sell offs of state assets leading to an inability to subsidize poorer users of those programs who need them).

    • Stuart Munro 13.1

      The inability to produce the promised surplus seven years in a row is a convenient example of the Key junta’s manifest unfitness to govern.

      • Colonial Rawshark 13.1.1

        Seriously? Key and English could produce a surplus tomorrow. Increase GST, a regressive tax, to 17.5%. Freeze hospital and education budgets. Drop 5% of all beneficiaries off the rolls. Cut back another year of the student allowance.

        There you go, you have your much vaunted surplus. Happy now?

        • Kiwiri 13.1.1.1

          Nic the NZer and Colonial Rawshark:

          +1,000,000

          Thanks

        • Stuart Munro 13.1.1.2

          By no means. Could have would have should have didn’t and probably never will. They deserve to be punished for their surplus lie at every opportunity.

          • Colonial Rawshark 13.1.1.2.1

            NZers don’t care about the “surplus lie.” Only the Thorndon Bubble does.

            And I think looking at what has been going on in the UK, Greece and Spain, a lot of Kiwis understand that forcing a surplus on a country means forcing austerity on a country.

            It’s concerning that the Labour Party prioritises government running a surplus as a good thing because it signals a fundamental economic misunderstanding. Government needs to run a deficit unless it wants to force the private sector into deficit.

    • Bill 13.2

      Wholeheartedly agree Nic the NZer.

      A surplus built on the backs of the poor isn’t something that anyone should be supportive of.

      Paint. Corner. Door. I think that Labour and sections of the left might want to consider where they’re going with this.

    • REdBaronCV 13.3

      The other way to balance a budget is to take a larger chunk of tax out of the well off, offshore interests, resource interests etc. No govt disaster there.

      • Colonial Rawshark 13.3.1

        Yes, but electorally we’d need to be in a place where a political party was willing to tax harder higher incomes, financial assets, financial transactions and the capital value of multi-million dollar commercial and residential property.

        Is there any political party in NZ willing to do that? Nope, in fact its not even on the agenda anywhere.

        • RedBaronCV 13.3.1.1

          I don’t know that I would put it too overtly on any agenda maybe something like “working people need their share ” “not offshore interests”

  14. Liberal Realist 14

    ” I don’t think it’s too strong to call it one of the biggest political deceptions of our lifetime.”

    How about Key promising to resign if the GCSB was found to be undertaking mass surveillance of New Zealanders? ‘Full take’, ‘mass collection’, what ever Key wants to call it, in the Pacific most certainly would have included Kiwi’s living and working in these countries. Therefor Key broke (another) promise & continued the ongoing deception.

    If Key’s statements around this time were not deception, what is? IMO this is/was much bigger than the repeated surplus lie.

  15. Bill 15

    NZ wants a surplus? Okay, whatever.

    Why though, is all the debate about creating a surplus allowed to smother any talk of the stuff mentioned in the last paragraph of the post?

    Do we really want a surplus if it’s to come at the cost of kids and their parents living in fcking penury? How about, as a society, we concentrate on equality and fairness and to hell with notions of surplus until those things are achieved….at which point it’ll be relatively painless to produce a surplus?

    It’s not the promise of a surplus that’s the lie to my mind, so much as the elevation of its attainment above, and at the cost of, so much that should be considered to be just basic social decency.

    High time for New Zealand to demand a change in priorities methinks.

  16. srylands 16

    Dicks

  17. Reddelusion 17

    How about Helen Clark speed gate, painter gate pledge card, how about roger Douglas, how about biribing students to win an election, how about middle class welfare working for families that we can’t now ween ourselves off, how about voters don’t lie, how about bleeding hypocrites

  18. Red delusion 18

    Exactly grant, this site try’s to pretend otherwise with holier than though attitude

    • Crashcart 18.1

      “This site” has many contributors and if you had taken the time to read the responses to the original post many people on “this site” think the statement made by Little was too much Hyperbole.

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