We know we’re not going to make the Budget’s forecast surplus, don’t we?
The earlier-than-expected surplus was the big reveal of the Budget. It’s supposed to signal that National really are the better economic managers they say they are. But it’s a fabrication.
Getting to $2.6 billion in the blackby 2028-29 is only achieved by tweaking numbers: hyping how good the economy could possibly be over the next few years, claiming the money saved by cutting 8700 public servants that may or may not actually end up cut, sticking with that OBEGALX measure that makes everything look better.
It requires believing that the economy is better now than it was in December, when the books were last opened and the surplus was slated for 2030-31.
It requires forgetting that, in December, things were looking a lot better than they are now. The economic green shoots were finally there. Trump hadn’t yet started the Iran war. The oil price was still below $70 a barrel – a price the Treasury reckons we won’t see again for at least the next 18 months.
It’s not the end of the world. Budget documents always do this. Predicted surpluses should always be treated as having the same odds as winning Ray’s raffle down at the fishing club.
And what’s arguably more important than fantasy surpluses is the fact that Nicola Willis had the mettle to resist handouts. Especially commendable given it is election year.
There’s obviously money for the usual stuff that keeps hoovering up taxpayer funding: education, health, roads, Winston Peters. But otherwise, hardly anyone else got much.
That is appropriate for the times. We are still piling on the debt for at least the next two years. We have been warned we’re at risk of a credit rating downgrade. Our debt interest bill is still climbing. The cost of superannuation is still chunking more and more out of available spending.
It wouldn’t hurt if we got used to this lack of freebies. If the “lolly scramble” attitude died. It will be a while before New Zealand is flush enough to justify Budget handouts. The value of that spending is often poor. It’s often welfare dressed up as something else.
This was a good Budget for Willis. After three Budgets, it’s now obvious no one should waste their time hoping she’s the kind of Finance Minister prepared to make unpopular but necessary spending cuts.
Therefore, she should be judged by what she is capable of executing. That would be, at best, holding back growth in spending. And she has managed that as well as you can with the cost of super pressuring her finances so incredibly.
That cost is now eye-watering. It has gone up $1.8b in one year alone. It costs $10b more now than it did seven years ago. By 2030, it will be $30b.
It does feel like superannuation is becoming Willis’ get-out-of-jail-free card. Fixing that one big thing relieves her of the pressure to tidy up all the small wasteful spends littering the Government books.
They each save only millions at a time. One change to super saves billions. This is why she used this year’s Budget, which makes no changes to super, to keep bringing it up.
We’ve come to assume that changes to super don’t pay off until decades later. When Bill English announced his plans to raise the age to 67, he delayed the first move for 20 years. It doesn’t have to be like that. The Bolger Government raised the age from 60 to 61 within a year of announcing it. It was at 65 within 10 years. It can be done that quickly. It could save Willis’ post-election Budgets.
Heck, it might even make that surplus actually happen.
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