Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


BUDGET 2012 COMMENT: Doddling along the best we can hope for

BUDGET 2012 COMMENT: Doddling along the best we can hope for

By Pattrick Smellie

May 25 (BusinessDesk) - Criticising Budgets for lacking vision or imagination is like shooting fish in a barrel, but even so, this year's Budget again feels like a missed opportunity.

Perhaps it's the intrusion of real world needs that means the government couldn't make better political use of the $558.8 million it expects to gather in its first partial asset sale.

After all, the title for this year's Budget is "Investing in our Future", which looked briefly like a bit of PR conjuring to contrast the pain of asset sales against the gain of new public assets.

But what did we get instead? A $250 million capital injection into KiwiRail. Granted, there's a political constituency for keeping alive our threadbare version of that 19th century technology. But let's face it, the recapitalisation of KiwiRail is a distressed investment. It even says so in the Fiscal Risks section of the Budget, which warns not only that KiwiRail will probably want another $90 million next year for reinvestment in its network, but that proposed writedowns to the KiwiRail balance sheet also represent a "new, unquantified" fiscal risk.

If there was ever a case for governments not owning businesses, KiwiRail is it.

Beyond that, the Budget is as you'd expect. Assiduous tweaking of revenue and spending - particularly more than half a billion dollars of savings from deferring automatic KiwiSaver enrolments - has helped support forecasts for a wafer-thin Budget surplus of $197 million in June 2015.

And that's achieved with a lot of priority shuffling allowing significant new investment in health, education, justice and science priorities.

While it's a zero Budget, it's by no stretch an "austerity" Budget, although kids who pay PAYE might not agree, having had their previous right to get overpaid tax refunded in exchange for making honest boys and girls of those who do odd-jobs for cash in the hand, which have always been theoretically taxable.

A cynic might put that move together with the latest whack at tobacco excises by speculating that would-be adolescent smokers will favour tax-free lawnmowing over taxed café work to fund the habit.

Part of the problem with Budgets is that their focus on the government's fiscal position crowds out the opportunity to identify major new strategic approaches which might actually make the New Zealand economy grow faster.

That's arguably where the biggest hole in the Budget lies.

Using current policy settings, the Treasury projects out key economic indicators through to 2026. The further out those projections go, the less likely they are to be accurate.

However, the fact that economic growth is projected to be just 2 percent a year by 2026 is effectively an admission of defeat on the likelihood of any step-change in the country's performance.

Until that long-term projected growth path improves, and is accompanied by a sustainable set of external accounts, then next year's Budget and those which follow it will continue to look like this one and the last one. That is, a document that tweaks the forward outlook, but promises only more of the same doddling along - assuming of course that the rest of the world plays ball.

The Budget assumes China and Australia will keep coming to the rescue of our export sector, at the same time as the turmoil in Europe remains the darkest and most unpredictable cloud on the horizon.

If that doesn't happen, even doddling may be a bit much to expect on current policy settings. So, yes, a sensible, balanced Budget, but not yet one to keep our children here.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Media: Julian Wilcox Leaves Māori TV

Māori Television has confirmed the resignation of Head of News and Production Julian Wilcox. Mr Maxwell acknowledged Mr Wilcox’s significant contribution to Māori Television since joining the organisation in 2004. More>>

ALSO:

Genetics: New Heat Tolerant Cow Developed

Hamilton, New Zealand-based Dairy Solutionz Ltd has led an expert genetics team to develop a new dairy cow breed conditioned to thrive in lower elevation tropical climates and achieve high milk production under heat stress. More>>

Fractals: Thousands More Business Cards Needed To Build Giant Sponge

New Zealand is taking part in a global event this weekend to build a Menger Sponge using 15 million business cards but local organisers say they are thousands of business cards short. More>>

Scoop Business: NZ Net Migration Rises To Annual Record In September

New Zealand’s annual net migration rose to a record in September, beating government forecasts, as the inflow was spurred by student arrivals from India and Kiwis returning home from Australia. More>>

ALSO:

Scoop Business: Fletcher To Close Its Christchurch Insulation Plant, Cut 29 Jobs

Fletcher Building, New Zealand’s largest listed company, will close its Christchurch insulation factory, as it consolidates its Tasman Insulations operations in a “highly competitive market”. More>>

ALSO:

Scoop Business: Novartis Adds Nine New Treatments Under Pharmac Deal

Novartis New Zealand, the local unit of the global pharmaceuticals firm, has added nine new treatments in a far-ranging agreement with government drug buying agency, Pharmac. More>>

ALSO:

Crown Accounts: English Wary On Tax Take, Could Threaten Surplus

Finance Minister Bill English is warning the tax take may come in below forecast in the current financial year, as figures released today confirm it was short by nearly $1 billion in the year to June 30 and English warned of the potential impact of slumping receipts from agricultural exports. More>>

ALSO:

Auckland Outage: Power Mostly Restored Overnight

Vector wishes to advise that all but 324 customers have been restored overnight. These customers are spread throughout the network in small pockets. The main St Johns feeder was restored around midnight allowing most of the customers in all affected areas to have power this morning. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news