Lolly scramble
ought to be doing better.
‘‘I am not at all confident it would be a one-off deficit and that they will be able to keep to their self-imposed spending limit, but time will tell on that as well.
‘‘This year is one of missed opportunity because our ‘terms of trade’ are at historically high levels – you have got to go right back to before World War II to get that level of overseas income that is available to us, and interest rates are very low.
‘‘In many respects this should be our moment in the sun.’’
The latest economic data may not support the case for a significant loosening of the purse strings to stimulate the economy.
But a moderate boost is coming anyway.
Early next year, the Government will start releasing more detail on how it will spend the first $8b of the $12b infrastructure boost it sketched out early in December.
While the actual spending will be spread over five years and much will be gobbled up by transport projects, there will be funding for green initiatives that may include replacing coal boilers in hospitals and schools.
The Government has also left itself a middling $3b for new operational spending in the Budget that is likely to spent on ‘‘wellbeing’’ initiatives such as mental health, tackling child poverty, and investing in skills and training.
Don’t expect any overall tax cuts, but it would be a surprise if the Government didn’t use the
Budget to at least signal a rejig of the country’s strangelystructured income tax thresholds and rates.
The opportunity is there to – at minimum – drop the growing number of people earning between $70,000 and $100,000 down into the 30 per cent tax bracket and to pay for that by upping the top tax rate on higher earners by a few per cent.
The timing might still be a bit raw, but if it does start to feel more confident, the Government could also begin the attempt to salvage something from the wreckage of its ‘‘no show’’ capital gains tax debacle.
Further tightening the bright line test on investment property and regulating for an assumption that people buying shares would be doing so with the intention of making a profit – and therefore routinely liable for income tax on their capital gains – would both be possible ways to regroup.
Goldsmith agrees the Government will be able to ‘‘talk big’’ about its spending plans, but questions its competence to deliver.
‘‘They are first class at announcing stuff, but show us the houses, show us the new infrastructure projects that have actually started, show us the extra students from the free fees, and the jobs from the Provincial Growth Fund,’’ Goldsmith said.
‘‘The big question will be whether people have confidence they can deliver.’’
It would be a surprise if the Government didn’t use the Budget to at least signal a rejig of the country’s strangely-structured income tax thresholds and rates.