The jigsaw pireces of the Budget are starting to click in the public mind if recent polls are any indication. In the last week :
- The IMF described NZ’s savings gap and net international indebtedness as “among the largest of any advanced nation”
- Analysis shows a $9.2bn additional fiscal hole in the Budget by 2023 arising from the tax changes
- Budget documents show expenditure as a % of GDP falling from 33% to 28%
- Bill English floats Kiwibank sale as one example of a number of SOEs ripe for partial privatisation.
In other words: give away taxes up front (very largely to their mates); run an out year deficit (deliberately); compress spending (as ‘prudence ” then demands); and flog off what is left of the family silver to fill the remaining gap (dressed up as mum and dad savings products, of course).
What does all this mean for the average Kiwi?
- despite the govt spin, they are worse off for the next four years at least due to the toxic cocktail of GST, inflation, other govt charges and taxes, and slow wage growth;
- public services like Heatlh and Early Childhood Education will be slashed as new spending lags inflation ($300m short in Health) or deliberate policy changes bite;
- the outlook for public services gets dramatically worse as the National Party tries to resize the state to 28% of GDP – although they won’t want to talk much about that before the election;
- the underlying economic problems reamin unresolved and get more intractable over time. There is no credible plan for growth and jobs.
Moral of story: do NOT let National get a second term Stop the malign juggernaut before it does irrepairable damage.