The surplusgoround

Written By: - Date published: 2:18 pm, July 8th, 2015 - 56 comments
Categories: economy, spin - Tags: ,

The on again off again surplus is on again:

Budget roars back into surplus

Vernon dear the time to “roar” back in to surplus was about 4 years ago. What we’re doing now is crawling back.

Hopes of a Budget surplus have soared after Treasury reported the books were in the black by more than $1 billion at the end of May. With just one month of the financial year to run it suggests the Government’s election promise of a return to surplus in 2014-15 will be met – ironically only weeks after it officially abandoned the target.

The 11 month operating surplus excluding gains and losses (Obegal) was $1.176b against a forecast $193m surplus in the May 21 Budget. The final outcome for the year will not be known until the full Crown accounts are published in October.

If we do indeed crawl back to surplus it will be political good news for the Nats, if not necessarily actual good news for a country where too many have borne the brunt of unnecessary and damaging austerity (worked so well in Greece!).

Around about now however, Key will be kicking himself for telling us all that the surplus was an “artificial” target that we the people are not interested in.

56 comments on “The surplusgoround”

  1. dukeofurl 1

    Its just a nonsense method of accounting as they are boorowing billions this year to pay the bills.

    “Acting Deputy Secretary, Financial Operations and Head of NZDMO

    In conjunction with the Budget Economic and Fiscal Update 2015, the New Zealand Debt Management Office (NZDMO) has updated its domestic bond programme.

    The 2015/16 domestic bond programme is set at $8.0 billion, $1.0 billion higher than forecast at the Half Year Economic and Fiscal Update (HYEFU) 2014.
    http://www.nzdmo.govt.nz/publications/mediastatements/debtprogramme/2015-05-21
    About a billion is to refinance existing debt but the rest is MORE borrowing

    On an everyday cash basis they are $6-7 Billion short this year !

    • Wayne 1.1

      If the govt has a cash surplus, it is not borrowing to pay the everyday bills, and by this I also mean interest on existing debt.

      It could be borrowing for capital projects, for instance major defence projects, or to build up its own cash balance.

      At any point in time in recent years the govt has $6 to 8 billion in cash. On top of that there is investments in the Super fund, ACC and EQC (not much there now). These additional investments add up to around $50 billion.

      The cash is enough for about 6 weeks expenditure, so the govt could be building up enough cash to cover say 12 weeks expenditure.

      • dukeofurl 1.1.1

        Im surprised , really surprised of your poor understanding of the government finances.
        The $8 bill bond program isnt just to keep money in the till, they can delay payments when possible like many businesses.

        Last years cash expenditure was $92 bill and as the above shows they are about $6.5 bill short. Thats spent more than they raised . A deficit of 6.5% in real terms
        http://www.treasury.govt.nz/government/financialstatements/yearend/jun14/15.htm
        Im no expert on government accounting but its no where near a ‘real surplus’ that ordinary people understand.

        Take the Christchurch earthquake costs, they were all ‘booked’ in about 2012 in one hit, but of course are spread over many years.

        The SOE expenses are not counted as they receive and spend in their own accounts. ACC levies arent there for general government costs. Same goes for EQC, it puts all its spare money its its investments funds. ( of course the earthquakes depleted that fund but they paid a fee every year since 1985 for such an occurrence of a shortfall)

        • Wayne 1.1.1.1

          Well, I disagree, at least in part.

          The govt has to have a decent amount of “cash in the till.” It is way too risky not to do so.

          What if there is a sudden shortfall in tax, or there is some disaster either here or overseas. These require real cash, and it might be right now, not next month.

          You can see what happens in Greece when cash runs out.

          But you are right on the Christchurch earthquake.

          • dukeofurl 1.1.1.1.1

            This is being absurd, if you say its a ‘cash float’ then they would only do it once, not last year and again next year.

            If they needed’ cash in hurry’ they would use short term treasury bills, ( 3-6-9-12 months) which are NOT domestic bond sales- which are long term out to 2031 !!!
            http://www.nzdmo.govt.nz/securities/tbills

            Its borrowing because they are spending more than they earn – no surplus by definition.

            Anyway the whole 11th month ‘surplus’ charade is only because of the warning bells over the ‘economy has peaked’ and starting to slide backwards.

            Its fairly clear that financial knowledge around the cabinet table is pretty thin

      • DoublePlusGood 1.1.2

        You still have to pay back the borrowing Wayne, and the overall debt continues to rise. Honestly, if this is the level of thinking of government ministers that we’ve had in this country, then sadly the state of the economy is not a surprise.

    • Keith 1.2

      Agreed. I mean this is the John Key government, a world of misinformation and never ever the full story or even a bit of the full story. A government where nothing ever is as it seems or at least as they say it is. Statistics regularly quoted without ever going into how they are arrived at like the so called lower reported crime that really isn’t.

      For a forecast where the government books were running at a loss in May to instantly finding a spare billion is truly miraculous. Praise the Lord, Hallelujah! What isn’t a surprise is it took them this long to get their stories straight to pull this stunt off.

      The only rational explanation for this lot of con men creating a “surplus” is the “surplus” will prove to be nothing more than very creative accounting.

  2. fisiani 2

    Under promise and over deliver is the way to customer satisfaction. National have lowered expectations and are playing the latest news very calmly. So what will be the sound bites of National achievement for 2017.
    Record employment levels
    Falling unemployment
    Free doctors visits and prescriptions 24/7 for under 13’s
    Extra money for new mothers
    Better results in NCEA 1 2 (81.2%) and 3
    Far fewer on welfare
    Lowest crime levels 17.6 % lower youth crime 37.3% drop and 9.6% drop in reoffending.
    Early childhood education participation levels up from 94.7 to 96.1% (2015)
    Immunisation up from 84% to 92.9%
    Back in surplus and tax cuts if you want them in 2018.
    Anyone think National can poll over 50%

    • Fran 2.1

      Dream on.

      • Wayne 2.1.1

        Fran,
        The government’s “Narrative” ( which fisani has essentially encapsulated) seems to have worked for nearly 50% of the population for three elections in a row, and could easily do so for a fourth.

        A strong narrative works for any government. If it ties in with peoples actual experience, it is hard for the opposition to displace it.

        Carping around the edges is never enough. Either the opposition has to have a better narrative or the governments narrative has to be demonstrably false.

        • Sabine 2.1.1.1

          and it has not worked for over 50 percent of the population, but that is ok, innit?

        • Lanthanide 2.1.1.2

          seems to have worked for nearly 50% of the population for three elections in a row, and could easily do so for a fourth.

          Oh dear, you’ve conflated ~47.31% share of the vote with 50% of the population of this country, despite the many people who didn’t vote or can’t vote in the election.

          • DoublePlusGood 2.1.1.2.1

            He’s also assuming that voters actually understand the narratives that they are being fed. Given Wayne Mapp himself is a voter and we can see above in this thread that he doesn’t understand economics, he should not be making assumptions about voters making choices on astute economic grounds.

            • James 2.1.1.2.1.1

              I love that you keep banging on about the people who didnt vote National or couldnt etc etc. Fact is – you have no idea who they would have voted for.

              Upshot – National is by far the preferred party. John Key is by far the most preferred Prime Minister, and votes lead to a National Government. (again)

              Frans says “Dream on” when asked if National can poll over 50% – face is they have and are at 49.5% in the latest Roy Morgan (the one that the left seem to prefer).

            • lprent 2.1.1.2.1.2

              You can’t expect a lawyer to have a good grasp of economics. So few of them actually understand the art of magic in mathematics.

              :smirk:

            • marty mars 2.1.1.2.1.3

              Yes, I feel embarrassed for mapp – the lack of knowledge is appalling – shown to be a typical gnat polly and voter

        • Dave 2.1.1.3

          Yep, Nero fiddles while Rome burns aye?

    • G C 2.2

      Excellent post fisiani. Don’t forget the ‘Capital Gains’ sound-bite. It’s only 2015 so the collection will only grow.

      Labour need to school themselves on ‘Hollow Men’ styled tactics, i.e. attacking the for mentioned sound-bites saying they show “The Government is out-of-touch with very day New Zealanders and Business.”

      Instead will Labour JUST point at the contacting economy and shrug shoulders when asked for policy ideas?

      • Lanthanide 2.2.1

        In 2014, Labour had far far more policies than National did.

        That, of course, was part of their electoral problem.

        • G C 2.2.1.1

          Labour did have a lot of ideas… …policies… .. .. …views? I have said to myself, “maybe David Cunliffe was onto something” – then I remember media images of him at some Pacifica Church, he seemed so phoney and I really believed he thought people couldn’t tell – it was a real voter turnoff (more self-righteous than a right-standing moral campus. Maybe I just brought into the ‘Tricky Dave’ rhetoric

          What is true is rhetoric works. Repetition is the mother of memory. Labour wasn’t able to sell their ideas. Who was Labour’s pollster and why tell Labour to promote unpopular policies? Where are the spin doctors? It’s all too often feature, but that’s the nature of politics – snap to it.

          The ‘capital gains’ tax was a Labour policy, yet in 2017 it will be a National sound-bite. I like Andrew Little, though ‘The Kings Speech’ often comes to mind. Grant Robertson – I have little to no confidence in. I’ve heard much better, truly informative and WISE economic commentary from yourself Lanthanide and TS commentators in general.

    • Tautoko Mangō Mata 2.3

      “Back in surplus and tax cuts if you want them in 2018.”????
      http://www.nationaldebtclocks.org/debtclock/newzealand

    • DoublePlusGood 2.4

      It turns out if you decide not to count unemployment correctly, you can make people disappear from unemployment stats.
      The same is true for crime if you just conveniently ignore crime, or don’t report it.
      The same is true for welfare if you just conveniently take people off welfare and don’t bother supporting them at all.
      The same is true for school results if you just fudge it until enough people pass (seriously, take a gander some time at 1st year uni papers and how far away from a 1st year uni standard they are in terms of the requisite background knowledge you’d expect people to get from their last 3 years of school).

      And yet you want tax cuts in 2018 when we’re, what is it, 80 billion in debt? Seems irresponsible. And stupid.

    • Stuart Munro 2.5

      Yes National have certainly lowered expectations – I don’t expect things will improve until we string a few of them up.

  3. Anno1701 3

    The pose in that photo is awesome…

    • infused 3.1

      Not sure of the relevance, but he is awesome.

      • Aaron 3.1.1

        Arnie says; “Do you like my surplus?”

        perhaps?

        • Thinkerr 3.1.1.1

          Or, as Minister of Finance, discussing the balance of payments, he might say “I’ll be blaack”…

        • Dave 3.1.1.2

          Does he say ‘Stick around, Bennett?” Or maybe “let off some steam Bennett” in the video? That could almost be relevant.

  4. Anno1701 4

    Check Bills pose in the article…..

    maybe its just me 🙂

  5. Gosman 5

    If the Government does indeed make the surplus what is the left’s response? Is it that it doesn’t matter? In which case does this mean you agree with John Key? Or is it that the policies of so called austerity have enabled this to occur? In which case does this mean you agree with Bill English?

    • McFlock 5.1

      The question is not whether one agrees with John Key. The question is which face of John Key one agrees with.

    • Lanthanide 5.2

      It means you can’t trust treasury predictions and shouldn’t be cutting taxes on the basis that treasury say they’re “revenue neutral”, or believe treasury when they put a magic “other economic factors” tweak in to show tax cuts will increase economic growth.

    • les 5.3

      surely the response is..this is an artificial target …and no one is really interested!

    • SHG 5.4

      The left’s response can only be that delivering a budget surplus is the biggest political deception in a lifetime.

  6. maui 6

    All would look pretty different if we had a global recession/crash this year. They say these things go in 7 year cycles, it’s now 7 years after 2008.

    • Anne 6.1

      Interesting… We had the big crash of 1987 (who can forget it) then we go to 1994 (wasn’t that around the time former PM, Bolger sent former Finance Minister Ruth Richardson packing?) then 2001 (Clark’s government was introducing policies designed to increase growth and unlike other 1st World countries we ended up with a healthy surplus) and then there was 2008… and its all been downhill since. 👿 Now its 2015 and it looks like it is turning to custard again.

      1987 Douglas dominated government. Not a Labour government in reality.
      1994 National government. (Finance Minister, Richardson came close to doing us in)
      2001 Labour government (no visible signs of recession due to competent Finance Minister, Michael Cullen.)
      2008 National government plus tax cuts for the rich. Its been downhill since.
      2015 National government and we’re on the slippery slope again.

      So, who has the better record at handling the economy? Labour.

    • fisiani 6.2

      In a global recession voters would plump for a safe pair of hands. You cannot look past Bill English who has turned the economy around from never ending deficits to at least the possibility of a surplus.

      • maui 6.2.1

        Or a radical pair of hands, like Syriza.

      • Draco T Bastard 6.2.2

        Oh, man you RWNJs are funny. Bill English, like all conservatives, hasn’t got a clue as to how the economy works or even what the economy is and you think he’s a safe pair of hands for it?

        • Wayne 6.2.2.1

          Hi Draco,
          Yes it is obviously true. Not a single centre – right politician has any knowledge about the economy. Unlike say Tsipras, Chavez or Castro who know everything.

          • Draco T Bastard 6.2.2.1.1

            Actually, they haven’t really got an idea either as they’re working as if the financials are the economy – just like the conservatives. They do do a better job of working the financials than the conservatives though.

      • DoublePlusGood 6.2.3

        What were the surplus/deficits when Cullen was in charge fisiani? Now compare them to the surplus/deficits with English in charge. Now work out who is the good economic manager (tip: it isn’t English).

  7. NZJester 7

    Any so called surplus is smoke and mirrors due to the big debt National has run up. Only once that is paid back will any surplus be real!
    National have been claiming financial credit for this country riding out the over seas financial crisis when all along it was thanks to Labour paying off our previous debt allowing National to borrow against the good credit rating given this country by Labour paying off that debt. Labour will not have that luxury to borrow due to Nationals running up of the debt to pay for tax cuts for their rich National supporters. They also made sure to make it so that the middle class and working poor are the ones to pay most of the interests on those debts by increasing GST.

    • Lanthanide 7.1

      “Only once that is paid back will any surplus be real!”

      Key, as usual, has triple-booked the surplus money for “paying back debt”, as well as tax cuts, as well as investment into infrastructure.

      Michael Cullen actually did use all of his surpluses to pay back debt: the surplus money simply ‘vanished’ and was put to no official surplus; but it meant they didn’t need to sell as many government bonds (borrow money) in future years.

      Key and English can’t control themselves though, they’ll spooge it all over the electorate in the run up to the 2017 election, just like Brash was promising to spooge over everyone at the 2005 election (thank god he didn’t, or we’d have been screwed with the GFC and earthquake).

  8. James 8

    Yep – Great news for National. With problems like Greece happening Kiwi’s will continue to be happy that the country is in a safe set of hands.

    Expect this to reflect positivity in the polls.

    • adam 8.1

      I just love Beaker’s (Key) sycophants. Nothing like the worshippers of cupidity, repeating powder puff propaganda to highlight their stupidity.

    • dv 8.2

      Thanks of the $100b debt!!

      • upnorth 8.2.1

        what – 40B CHCH

        20B Labour legacy policy

        20B GFC

        please do not make rubbish up and I am really sorry that you are criticising people who are In CHCH – I am glad as a new zealander we help our fellow citizens out

      • Anno1701 8.2.2

        Its double think innit

        debt is wealth & wealth is debt

    • Stuart Munro 8.3

      Bugger the polls – let’s see the debt drop before we get Greeced. Be nice to see some actual growth, ex-Christchurch & migration too. We’ve been stagnating since Bill got his febrile paws on the finance portfolio, with only the bursting of the Auckland bubble to look forward to. But we’re on the cusp of something special – here’s hoping it’s kleptocraticide.

    • Draco T Bastard 8.4

      Ah, got it, ‘…safe pair of hand…’ is the Crosby Textor lines that have been passed down from on high.

  9. keyman 9

    with china stock market in melt down events off shore will overtake new Zealand

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