Look To The Government To Lead From The Front
Before Christmas the government's Speech from the Throne somewhat set the pace for the new Government. Forty-five minutes long and packed to the gills with ideas and plans the speech left many of those listening to it with a sense of surprise at just how much the new government had planned.
Today in the Budget Policy Statement the new government gets to say how much it will all cost.
Scoop will be attending the BPS lockup at Treasury this afternoon and will bring readers a report shortly after 2pm.
In the BPS - which is one of the key elements of the fiscal responsibility regime enacted by Ruth Richardson and Bill Birch in the Fiscal Responsibility Act - the government is required to produce three year fiscal forecasts of income and expenditure.
This can impose considerable discipline as the Fiscal Responsibility Act does not allow any of the fiddling of numbers which typically took place in the pre-fiscal responsibility days.
That said with this BPS the government is in the enviable position of being on the upswing of the economic cycle.
This means that as each month's fiscal accounts are published we are seeing the government's surplus estimates growing as tax revenues come in ahead of forecast.
In addition as it is typical in the field of economic forecasting for economists to underestimate growth on the way up and over-estimate it on the way down, what risk there is in the forecasts tends to be on the upside.
Add in the fact that a tiny increase in economic growth tends to have a marked impact on the fiscal balance and on the bottom line when the latest Treasury forecasts are published this afternoon there is likely to be lots more money in the kitty than previously thought.
This morning the Dominion is reporting that the government will probably spend an extra$850 million - more than it had already indicated it would spend - over the next three years. Scoop is inclined to think that if anything this may be on the low side.
Finance Minister Michael Cullen has indicated that the budget round will begin following the publication of the BPS forecasts and so something akin to a lolly scramble will shortly begin.
Under the National Government the BPS was by and large fairly thin on the detail of what exactly the government planned to spend any extra money it had on. We will find out today whether the same style will be adopted by Dr Cullen.