Bud­gets not what they used to be

Kapi-Mana News - - CONVERSATIONS - GOR­DON CAMP­BELL

Bud­get Day used to be the one date in the cal­en­dar year when the public got told the state of the na­tion’s books, and how the next year’s rev­enues would be gen­er­ated.

It could mean happy (or bad) news. Labour’s Black Bud­get of 1958 for in­stance, has be­come a no­to­ri­ous mile­stone in New Zealand’s po­lit­i­cal his­tory, and ditto for Na­tional’s Mother of All Bud­gets in 1991.

Un­til quite re­cently, the me­dia would run stories about this mys­te­ri­ous doc­u­ment be­ing printed in se­crecy, and photos of the Fi­nance Min­is­ter strid­ing pur­pose­fully along the cor­ri­dors to where its con­tents would be un­veiled.

It’s not done that way any more. For weeks be­fore­hand, the Gov­ern­ment dripfeeds the Bud­get so that max­i­mum public re­la­tions mileage can be ex­tracted from each item, and crit­i­cism pre­empted.

Bud­get Day has been re­duced to a show­case for the Fi­nance Min­is­ter to brag about how well things are go­ing.

Iron­i­cally, the Trea­sury fore­casts on which that op­ti­mism is based are now treated with healthy scep­ti­cism, and rou­tinely re-ad­justed at quar­terly and hal­fyearly in­ter­vals.

Last week’s Bud­get out­look then, was typ­i­cally up­beat. GDP is grow­ing. Sur­pluses are be­ing piled up. Jobs are be­ing cre­ated.

The av­er­age wage is ris­ing – helped aloft by soar­ing chief ex­ec­u­tive salaries and the culling of jobs for the mid­dle-class.

Trea­sury added its own rosy as­sump­tions that im­mi­gra­tion will some­how fall from the cur­rent 70,000 a year to 12,000 over the next four years, and that dairy prices will bounce back sig­nif­i­cantly over the same pe­riod. This year’s mod­est $1.6 bil­lion of new in­vest­ment is set to be dwarfed how­ever, by the $2-$3 bil­lion pro­gramme of tax cuts be­ing mooted by the Prime Min­is­ter for elec­tion year, 2017.

On past per­for­mance, tax cuts largely get frit­tered away on con­sumer spend­ing, and will heighten the gaps in in­come in­equal­ity that this Bud­get ei­ther ac­knowl­edged with to­ken amounts, or not at all.

Un­sur­pris­ingly, the wor­ry­ing news was buried in the fine print.

Re­port­edly, un­em­ploy­ment will be at 5.6 per cent next year – with 146,000 out of work – and re­main above 5 per cent in 2018.

Real wages are fore­cast to rise by less than 1 per cent this year, and to fall by 0.3 per cent the fol­low­ing year.

By 2020, the share that wages com­prise of the na­tion’s wealth will have fallen by 1.3 per cent, leav­ing each per­son an es­ti­mated $400 on av­er­age worse off than they are cur­rently.

Look­ing ahead, the claimed need for fru­gal­ity in so­cial spend­ing will be up­ended by the tax cut binge planned for elec­tion year.

Ul­ti­mately, the Bud­get fore­casts them­selves con­fess to be­ing vir­tu­ally mean­ing­less. The Gov­ern­ment is, for in­stance, about to re­lease a De­fence White Pa­per set­ting out mil­i­tary re­place­ment costs re­li­ably es­ti­mated at $11 bil­lion over the next decade.

Yet the Bud­get pro­jec­tions en­tirely omit­ted those loom­ing costs.

Buried on page 73 in the Bud­get Eco­nomic and Fis­cal Up­date was this de­cep­tively bland para­graph: ‘‘Changes to NZDF op­er­at­ing and/ or cap­i­tal fund­ing may be made over the fore­cast pe­riod to achieve the De­fence White Pa­per set­tings.’’

That fact not only ren­ders the Bud­get fore­casts and pro­jec­tions vir­tu­ally ob­so­lete upon de­liv­ery, but – given the mas­sive amounts in­volved – it also makes talk of tax cuts in 2017 seem ir­re­spon­si­ble.

Talk­ing pol­i­tics

Newspapers in English

Newspapers from New Zealand

© PressReader. All rights reserved.