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

 

Banking: Westpac NZ Lowers Merchant Fees For Small Businesses

Westpac NZ is rolling out a new merchant fee pricing structure that will lead to cost savings for more than 10,000 small and medium Kiwi businesses, and could make contactless transactions more widely available for customers. On 1 September, most ... More>>

REINZ: Million Dollar Plus Property Sales Increase 11.7% Nationally

The number of properties sold around the country for one million dollars or more during the first half (H1) of 2020 increased by 11.7% compared to H1 2019, with 5,426 million-dollar plus properties sold (up from 4,858 in H1 2019) according to the Real ... More>>

Waste: Government To Regulate Plastic Packaging, Tyres, E-Waste

The Government is stepping up action to deal with environmentally harmful products – including plastic packaging, tyres and e-waste – before they become waste. As part of the wider plan to reduce the amount of rubbish ending up in landfills, ... More>>

ALSO:

Bankers Association: Banking Becomes First Living Wage Accredited Industry

Banking has become New Zealand’s first fully living wage accredited industry, leading to nearly 1800 employees and contractors moving onto the living wage and gaining greater economic independence for them and their families. As of today, all ... More>>

ALSO:

Economy: Funding For 85% Of NZ Not-For-Profit Entities Impacted By COVID-19

Results of a recent Institute of Directors poll show that 85% of board members on not-for-profit organisations say COVID-19 has moderately or significantly affected their funding. The ‘pulse check’ conducted in the first two weeks of July looked ... More>>

Volcano Detection: Eruption Alert System Would Have Given 16 Hours’ Warning At Whakaari

An alert system that could have given 16 hours’ warning of last year’s eruption at Whakaari/White Island is ready for deployment, University of Auckland scientists say, with warning systems for Ruapehu and Tongariro the next priority. ... More>>


Property: Queenstown Rents Experience Biggest Drop In Seven Years

Rental prices in the Queenstown-Lakes district saw the biggest annual percentage drop in seven years after falling 28 per cent on June last year, according to the latest Trade Me Rental Price Index. Trade Me Property spokesperson Aaron Clancy said ... More>>

Seismology: The Quiet Earth

As many daily activities came to a halt during lockdown, the Earth itself became quiet, probably quieter than it has been since humans developed the technology to listen in. Seismologists have analysed datasets from more than 300 international ... More>>

RNZ: James Shaw Says Kiwibank, Not Ministers Should Decide On Investors

Climate Change Minister James Shaw says Kiwibank's decision to stop doing business with companies dealing in fossil fuels is the right one. More>>

ALSO:

FMA: Kiwis Confident Financial Markets Will Recover From COVID-19, Plan To Increase Investments

Despite the majority (60%) of investors experiencing losses as a result of COVID-19, the outlook on investing remains positive, according to a Financial Markets Authority (FMA) survey. Most Kiwis (71%) were optimistic that the pandemic will pass eventually ... More>>

FIRST Union: Warehouse Using Covid For Cover As Extensive Restructure Makes Everyone Worse Off

(FIRST Union comments on The Warehouse consultation and proposed restructure) 'Unfortunately the Warehouse have done the disappointing thing and used Covid-19 to justify a bunch of operational business decisions that will leave hundreds of workers without jobs ... More>>

ALSO:

Stats NZ: Mixed Performance By Regions Leaves National Emissions Picture Unchanged

Approximately two-thirds of New Zealand’s regions recorded decreases in their total greenhouse gas emissions, while one-third of regions saw increases between 2007 and 2018, Stats NZ said today. “While some regions reduced their emissions, ... More>>

RNZ: Economic Activity And Business Confidence Bouncing Back

Two surveys from ANZ show business confidence and economic activity have rebounded, but uncertainty about the future remains extreme. More>>

ALSO: