Today is Budget Day. I will be flat tack working with Hon Phil Goff on Labour’s response. It should be a Jobs Budget. It won’t be.
This looks like being the budget of the Great Lie – the cancellation of the tax cuts that were the centrepiece of National’s 2008 election campaign. You could even say that deception compromises National’s right to govern at all.
Expect this to be a conservative budget that wastes opportunities to put jobs and people first. It will compromise growth by failing to invest sufficiently in skills, innovation and productive infrastructure.
It will impose near-impossible assumptions of low or zero growth in Crown expenses in out years in order to make the long term fiscal picture look better.
The smoke and mirrors may hold off the ratings agencies for today, but in the long term will do little to address their core concerns that the NZ economy is not diverse enough, innovative enough or exporting enough to pay our way.
But the answer to that problem is a real plan for growth, skills and jobs – not the ambulance at the bottom of the cliff of government surpluses being used to offset the under-performance of the real economy.
Ironically then, the ratings agencies are closer to Labour’s view – gear up the engine and the fiscal balance will be easier to manage over time.
Kiwis are decent folks. They elected this government and they are happy to give them a fair go. But when they realise that the 3 years of tax cuts they were promised were NEVER going to happen, and that there is NO PLAN to take us out the other end of this recession – they will begin to ask whether they’ve done the right thing after all.
UPDATE: A “Standard and Poor” Budget
First impressions
This Budget has all the vision of a possum caught in the headlights of the world recession. It does nothing for jobs. Nothing for growth. No constructive new ideas. No positive vision. No game plan. At best “Standard” In reality ‘Poor”.
It manages to turn the debt curve down from a peak of 42% only by rosy assumptions like:
- suspending Super Fund contributions for 10 years leaving a $30 billion hole for our kids to pay
- permanent “deferral” of tax cuts – surely revealing the greatest electoral lie in modern NZ history
- capping government expenditure growth to a 1% per annum (nominal – a real cut that impies a virtual wage freeze across the public sector)
- rosy growth assumptions of 2.1% by 2011 and 4% by 2013
- $2 billion of cuts over 4 years to government expenditure including:
- gutting innovation, skills and training – hardly a growth strategy!
- cutting back new funding for international trade
- the much heralded insul-fluff is only really $35 milion per annum of new funding – the rest is poached from Heath and EECA
All in all this is visionless rubbish that does NOTHING to lead NZ into a “brighter future”.
One is left wondering what the National government has been doing for the last 6 months.
Given the most serious crisis since WW2, NZ deserved better than that.