The $1.1 billion cap on new spending has almost all gone ($800m) on health, education and science. Most agencies have a nil increase. Over four years DHBs get an extra $1.4b.
A stronger economy (economic growth is so vital) means we are predicted to return to surplus by 2015/16 and net debt peaks at 27.4% in 2014/15. That is welcome but only will happen if fiscal discipline is maintained. Also if we have a recession every ten years or so (which tends to happen) then that only gives us a couple of years of paying off debt before we may face similar problems again. The reality is that there may not be significant extra funding for anything until around 2017.
While this is better than the disaster inherited by the Government (net debt projected to never peak), the reality is that net debt is still going to increase from $27b this year to $63b in 2014. On average that is still an increase in net debt of $175 million a week!
GPD is now forecast to grow 3.2% in the year to March, up from 2.4%
The operating deficit for this year is projected to be $8.6 billion. Now does someone want to try telling me that the Government should be spending even more money? It is clear we need less spending, not more.
In what is overall a very good budget, this is the weak part. The deficit is still too high, and another fiscal shock could still stuff up us badly. It would be nice for the Government to set a target (as a % of GDP) to which they want to get spending under. I think 30% is a good target to aim for.Tags: Budget