With great fanfare last week the Government announced what it wanted to suggest was a stonking big operating revenue surplus in the country’s accounts. We are finally in the black to the tune of $1.8 billion dollars. This headline was obliterated by other news released that day that Housing Corp was running out of money but the government will still be hoping that it feeds into the “National is a good manager of the economy” narrative.
I have had a read of the treasury documents relating to the release of the news and there are a few reasons why this headline is overly optimistic. And undeserved.
The good news is indeed that there is an operating surplus of $1.8 billion. The causes seem to be primarily good growth and a greater than expected tax take caused by surging immigration. Keep those people coming as our economy depends on it.
There were some areas of not so good news.
ACC had actuarial losses of $5.1 billion and the Cullen Super Fund had actuarial losses of $2 billion. Sure they are book entries and relate to actuarial losses because of a change in the discount rate applied but a similar book loss of $4.8 billion back in 2009 again because of actuarial losses related on that occasion through a more conservative formula calculating future liabilities being applied was described by Nick Smith as a financial crisis. National is lucky that Labour will not stoop to the same lows.
There was another $1.5 billion liability because of the change of the price of carbon and its effect on the Emissions Trading Scheme. The price of carbon has increased considerably and will continue to do so. The Government sheltering business from the real cost of carbon results in a cost to us all.
And net Crown debt increased by $1.3 billion. Borrowing is still not under control.
Funny how the headline figure was the one figure that captured the headline. With net debt increasing and forecasts for ACC, the Cullen fund and the Emissions Trading Scheme worsening even talking about a tax cut is crazy.