For release: 25 May 2017
Budget 2017: An ABBA medley
The 2017 Budget resembles an ABBA medley, said ANZ Chief Economist Cameron Bagrie.
I Have a Dream (delivering for New Zealanders); The Name of the Game (it’s growth); Money, Money Money (rising surpluses); Gimme, Gimme, Gimme (health primarily); and Lay all your Love on Me (infrastructure and a family incomes package).
“With the hard yards on fiscal replenishment done, and solid growth and surpluses projected, the Government is in the enviable position of having options,” Mr Bagrie said.
“They’ve chosen to deliver on that via a balanced approach.”
• Surpluses as far as the eye can see which can be used to fund critical investment. We are paying our way as opposed to borrowing and spending;
• A strong focus on building resilience and rainy day coffers by paying down debt;
• A massive investment programme; we’re behind the 8-ball but at least fronting up and not borrowing to do it;
• The inevitable election lollies; that’s election year reality;
• Sharing the spoils of growth by a Family Incomes package;
• The usual injections into key areas (health and education) to keep the wheels turning.
“I can’t think of another country around the globe that can deliver that mix,” Mr Bagrie said.
“The Budget ticks all the right boxes, though the missing link in the Budget is savings. You see semblances of it through the growth strategy, responsible fiscal management, and resumption of Super Fund contributions.
“The economy is entering a juncture where funding a domestic savings shortfall via international capital to meet our investment needs is becoming more challenging.
“More domestic savings is required to meet New Zealand’s investment needs or investment needs to fall. A more proactive stance towards saving is needed in the future or interest rates will need to move up further than would other be the case to do the job.”