Finance minister gets chance to shine

contained in the May Budget, surpluses of perhaps $5b to $6b are starting to look credible.

Even if the Crown has to find as much as $3b to fund Kaikoura earthquake repairs, most of that spend is a one-off capital requirement.

There will still be ample headroom for a combination of measures, which might reasonably include resumption of contributions to the New Zealand Superannuation Fund. The excuses for continuing to starve the fund run back to the global financial crisis – which is now nearly seven years ago.

Some will also go to debt reduction. In the end, the total sums available for government largesse will be considerably smaller than those giant surplus numbers will initially look.

And therein lies the challenge for Bill English in using the updated outlook to cement his claim on the prime ministership.

While the figures themselves will give a credible backdrop to claims that the New Zealand economy has been well-managed under English, the Budget Policy Statement has been heavily tweaked to take account of the quake bill.

That inevitably makes the statement more cautious and less generous than it would have been.

There is also unlikely to have been time to reconsider the text of the statement in light of the Prime Minister’s sudden departure.

While English has known it was on the cards since September, he appears to have been as surprised anyone by Key’s timing this week.

That means the Budget Policy Statement is likely to err on the side of dry and sober.

What English needs in the few days left before Monday’s caucus vote on the leadership is not only a bit of a splash, but a clearly articulated view of his own approach to the way the dough should be divided up.

Already, the Government knows that the hoary old promise of income tax cuts has become a double-edged sword.

Voters across the political spectrum are highly focused on social inequality, so the emphasis in any such package needs to be on fairness rather than the usual tax package, which inevitably most benefits the already wealthy.

Gareth Morgan’s newly launched The Opportunities Party is exploiting the moment, releasing tax policy yesterday that would see the wealthiest pay more tax.

Last week’s Colmar Brunton poll also found that almost half (48 per cent) of those polled on the best use of the $1.8b surplus rung up in the year to June this year should be spent on improving social services.

Just 17 per cent favoured tax cuts, while 31 per cent wanted debt reduction.

For English, the opportunity afforded by the fiscal forecast and budget policy announcements is to stamp his own distinctive approach to social spending – his much-vaunted ‘‘investment approach’’ – along with some heart for lower- and middle-income earners who may be more tempted by Labour or NZ First now that Key is no longer on offer from National. –Businessdesk