Hi RA readers – I’ve been off air a bit lately due to running around the country on the post- Budget speaking tour, and because my laptop died!
Today parliament shifted into a new stage of the Budget debate – the Appropriations Bill that legitimises the Supplmentary Estimates (amended spending lines) between Budgets 2009 and 2010. It was remarkable for what it does not say – nothing about a plan for protecting jobs or lifting incomes during the worst of the Great Recession. No new ideas over there.
Quick feedback from the Budget tour: spoke to about 20 groups, a mixture of Labour-organised public meetings, community sector groups and businesses. Hard to tote up exactly but would have seen close to 800 people face to face: groups of 160 down to about 25, plus individual business site visits.
The feedback was clear: most Kiwis understand that by the time inflation of 5.9% next year eats away the tax swindle, and wage growth is held down, they will be worse off. That includes increased govt charges like ACC and ECE, plus power bills, rent and higher mortgages. The Government made the classic mistake of overpromising and under-delivering. Kiwis hate the rise in GST. They know the tax cuts aimed primarily at the wealthy are unjust and inefficient.
Was it a coincidence the govt’s polling fell 5% in the week after the Budget?
Second, businesses and commentators understand that the Budget lacks a real plan for jobs, incomes and growth. Fiscal prudence matters, but it is no substitute for a strategy to address the yawning triple deficit around the savings gap, current account deficit and innovation deficit. Gutting Kiwisaver, the R and D tax credits and NZSF prefunding made these worse. The Govt’s innovation package, which represents only 39% of the value earlier striped out, has been almost universally panned.
Third, the added debt from the unaffordable tax cuts has opended up $1.1 bn fiscal hole over 4 years, $9.2bn over 12 years, and that makes the job of turning the boat around ever harder. National will seek to fill this “strategic deficit” through asset sales and service cuts. Don’t let them!
Future posts are going to broaden out somewhat to the rlated issues of monetary and fiscal settings that surround the needed economic strategy.