Budget 2015 brings home reality of a hard economic grind
Finance Minister Bill English announced his seventh budget to the nation today with few surprises and little fanfare. Deloitte CEO Thomas Pippos says Budget 2015, the first budget in the Government’s third term, is evolutionary rather than revolutionary, and brings home the reality of a hard economic grind.
“Evolutionary budgets are not a bad thing. They provide a degree of stability and predictability that business likes,” says Mr Pippos.
“They also recognise that there is no magic wand or initiatives that deliver instantaneous gratification; which should always be viewed with a healthy degree of scientism.”
Mr Pippos says that the focus on missing the surplus largely amounts to political noise and misses a more important point.
“It’s the speed and direction of travel for our economy over a wider period of time that is more important to consider. The return to surplus is no more than a marker on this journey – a score part way through the game when two very large sets of numbers come together to create a surplus or deficit,” says Mr Pippos.
Budget 2015 continues to reference both a surplus target and debt reduction while allowing for targeted spending increases within the same broad base low rate tax settings.
“Despite New Zealand’s relatively positive economic outlook it is wise to recognise that the country, and the Government, does not totally control its own economic destiny. Issues in Europe and Asia, and more closely in Australia, can still materially shape our economic future, as can commodity prices and our exchange rate, none of which we really control.
“On the domestic front, the issues of child poverty and the different speeds of the economy between Auckland and the rest of the country (the economic activity associated with the Canterbury rebuild notwithstanding) present the Government with significant challenges as they attempt to line up their fourth term.
“While Budget 2015 recognises these problems, and starts to develop some solutions, there are no easy answers,” concludes Mr Pippos.