Surplus a marker along New Zealand’s economic journey
Surplus a marker along New Zealand’s economic
What’s more important is the speed and direction of travel
Finance Minister Bill English announced his sixth Budget to the nation today, delivering an anticipated surplus of $372m. Deloitte CEO Thomas Pippos says the projections for increasing surpluses in future years are also an important part of the story.
“The lens through which Budget 2014 should be viewed is not about the anticipated surplus but about the journey, including the speed and direction of economic travel over that wider period of time. Where the economy has come from and where is it going. Will it enable us to provide for the types of lifestyles we aspire to in New Zealand – more widely, to win against the others that we are competing against?” says Mr Pippos
Through that lens, Budget 2014 should be viewed as a success or a relief, even by the most uncharitable.
“The size of the surplus trivialises a journey that has taken six years to get to and suggests that we have arrived at a destination. It’s an abstract that without context is largely meaningless. It is mischievous to look at it in any other way. Similarly mischievous is an undue focus on historic variances to forecasts. Forecasts are no more than best guesses that are incapable, at least as far as revenue is concerned, of surgical precision.”
Targeted expenditure is the theme. Further investment in paid parental leave and the parental tax credit are key examples of this.
“This is a good place to target additional spending as it goes to productivity, workforce participation and nurturing the growth of the next generation of New Zealanders,” says Mr Pippos.
Juxtapose Australia for context. Still the lucky country in many respects but over the same period they are looking at record deficits, tax increases, and expenditure cuts, to curtail (not reverse) the $50 billion deficit announced on Tuesday.
“Budget 2014 may not win the Government
the re-election but it certainly won’t lose it for them
either,” concludes Mr Pippos.