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Special report: Why the May Budget needs to show leadership
David Chaston presents a Special Report on the half year Crown accounts and why we need some serious innovation in the forthcoming Budget announcement, brought to you in association with BNZ
On May 20, Finance Minister Bill English will present his second Budget to Parliament.
It will be one of the more eagerly awaited policy statements from this government.
This year we have had the
- 2025 Commission ,
- the Tax Working Group,
- and the Capital Markets Taskforce.
all appointed by this government to look at some tricky issues, ones that require special leadership to solve.
They have now all reported back but the reaction from the Prime Minister, and his cabinet colleagues has hardly been enthusiastic.
Related Topics
The Finance Minister clearly noted the challenge the country faced at last year's Budget review, pointing out that unless something significant was changed, we all face a "demoralizing trudge" out of the debt binge we had over the past ten years or so.
Surpluses are not expected to return until 2016 at the earliest "“ until then we will be adding public debt that grows from 5% of GDP to 35%. And this is on top of 120% of GDP incurred by the private sector, basically for houses and farms.
We shouldn't be trying to solve our debt problem by borrowing more, or shifting debt from the private sector to the public sector.
Today we got the Crown accounts, the status at December 2009.
At first glance, they look better than expected.
But look a little deeper, and what is keeping things this way are a series of one-off positives. Things like ...
- backing off some of the deposit guarantee provisions
- better settlements with the banks over their tax cases
- shifting out Treaty of Waitangi settlements
- and lower interest rates and lower immediate borrowing requirements.
But, few of those things will get repeated.
Tax revenues aren't holding up well
- taxes on individuals are more than $400 million less than originally budgeted,
- and $250 million less than the Treasury's own half year fiscal update,
and without the bank tax settlements, corporate taxes collected are notably less as well.
It is only GST that shows any chance of achieving last years Budget estimate on a sustainable basis.
The Tax Working Group declared our tax system "˜broken'. It needs a comprehensive fix, for all the reasons that we have explored on this website.
But it seems unlikely we are going to get a proper fix on May 20, based on the Prime Minister's recent equivocations.
All that seems likely is a stream of sickly government accounts showing revenues less than expenditure and rising debt levels, all to be paid for by the next generation of taxpayers and voters.
Or, until we get real leadership.
16 Comments
David - good report, classic
David - good report, classic Interest .co.nz - telling us how it really is. "Until we get real leadership...." Fat chance. Or maybe we have, but not in the interests of the majority of Kiwis, present and future - manipulation - shame most don't realise it. Chill with some Tui dude.
Dead right David, but surely
Dead right David, but surely in a democracy the people get the leaders they deserve. The last election resembled an auction more than would be candidates soberly telling it like it is and seeking voters' trust to implement the reforms they deemed necessary.
By the way, when is your worthy commentator Neville Bennett going to resurface? Years ago I had the priviledge of attending some of his lectures at Ilam and one of his poetry soirees. His blogs have the backing of a lifetime of scholarship and shrewd observation of history.
Crooked Thumb, I second your
Crooked Thumb,
I second your request for Neville Bennett to resurface. I always enjoy his contributions.
On another post yesterday several
On another post yesterday several people blamed MMP as being too consensus based to allow hard decisions to be made. Its not the system that's preventing change - its the mindset of the politicians. You don't need an unfair gerrymandered system like FPP to effect change, you need politicians who are concerned first and foremost about the future of their country, not their jobs and pensions. Not to do what you know needs to be done because you don't think it will be popular and see you punished at the polls is like someone seeing theft or fraud in their workplace but not saying anything because they don't want to be a "nark" or a whistleblower and risk their job. Hear no evil, see no evil. When you have career politicians who are more concerned about their salary and pension than anything else they pander to vested interests, especially those who contribute to their re-election. I didn't vote for National but I had a faint hope that John Key would use his financially secure position to push past that mindset. Perhaps if politicians had no gold plated pension scheme and were limited to 2-3 terms we might get the national interest instead of self interest.
Needs some history added to
Needs some history added to the many short-term deceptions presented in mainstream media and this blog, this article mentions the debt binge of the last ten years? forget that deception, what of the debt repayment crisis of 1845, 1860, 1890. 1910, 1939, 1961, 1984, 2007, forget the tribal party camps that defer blame to "the last Government", we have been preyed upon by a corrupt banking and credit system no matter who the government.
I have brought for the very reasonable price of $89 a multifunction printer and copier with OCR capabilities, thus I can now scan books, documents etc and convert to searchable pdf files, I posted last night the first 21 pages of a book by AN Field - The Truth About New Zealand, written 1939,
http://publiccreditorbust.blog.com/2010/02/17/bankers-impact-upon-new-ze...
disappointing to see thus far only six folks have bothered to take a look, this book is by a chap who was labelled a conspiracy theorist at the time, but time has proven him to be a conspiracy reporter of fact, this 21 pages will give any Kiwi the greatest understanding of the slaveminded bankers impact upon race relations, social and economic structure, I beg any serious student of NZ economics and debt management history to take the time to read it.
"I second your request for
"I second your request for Neville Bennett to resurface."
2x
Thanks David you are very
Thanks David you are very right, the most truthful report on here for a while.
All this talk of cutting taxes left right and centre, will end up getting the counties accounts into deep trouble.
Personally I think some people have become obsessed with the tax working group report and it's blinding them to the actual realities of NZ's situation
Yeah some of the ideas were fine, but we have to still be realistic, the TWG doesn't have to worry about paying the bills, and what the heck is wrong with gradual change?
If people are so concerned about gen x or y or whatever, loading the country up with massive public debt now and expecting them to pay later won't help them much either.
We are saved! There's some
We are saved! There's some backbone growing:
Key puts foot down over wharf.
"We are the co-owners with the ARC so in the end we can make that call ourselves. It doesn't mean we have to listen to what, particularly John Banks thinks or what others think."
"Why the May Budget needs
"Why the May Budget needs to show leadership"
So we are screwed then...
regards
"You don’t need an unfair
"You don't need an unfair gerrymandered system like FPP to effect change" Nope, as JK etc is proving, buy the small parties off at the expense of the majority...instead of simply doing what they want....As an alternative look at the USA's system....its no better in fact arguably worse...
regards
My pick for the biggest
My pick for the biggest waste of taxpayers money - Eden Park - this antique should have been closed with teary eyed people able to buy a bucket of dirt as a door stop at home and affordable well designed medium density housing built on the site with the profit going to a new national stadium in town. Private/public partnership like the Harbour Bridge would have done nicely with an appropriate upgrade of public transport. The Halsey Street/Tank Farm would have been great. But oh no we have to build an even bigger white elephant
Yeah, 'real leadership'! Where is
Yeah, 'real leadership'! Where is it? Well, it's not in a former parasitic middle man currency trader that's for sure. Vote for me people and i will not only do the job for a mere $100 thou a year, I will be 'bold' and 'inventive'! The Justice Party (true democracy, true value)
p.s. no actual party exists at present.
Bring back Nevile, Bring back
Bring back Nevile, Bring back Neville.
Neville Bennett on tax reform? That would be awesome
I've still yet to see
I've still yet to see where the money is going to come from for these upcoming tax cuts, looks like we'll just be digging a deeper government debt hole, to be paid back by the generations to come.
Hopefully they can think about the long term as well as the short term.
@Phil Hard to see how
@Phil
Hard to see how any government can think long term.
Whatever you think about policiies such as WFF, 'Cullen Fund', contribution levels to kiwisaver etc. It seems that the policies are altered with every change of government.
No consistency, no agreement, no 'common purpose', just ongoing 'I was right, you were wrong' - until the next time.
And if the Budget still
And if the Budget still wants to lead us to catch up to Aussie, well cop this!
"...during the eight years to 2008 Australian productivity lagged France, Germany, Ireland, Japan, New Zealand the UK and the US. Worse still there has been a dramatic fall in Australian productivity growth in the past few years..."
http://www.businessspectator.com.au/bs.nsf/Article/Not-made-to-measure-C...