Jordan’s latest defence of the indefensible, namely the suggestion there is no money for tax cuts, is to say that the $6.5 billion surpluses we have had the last two years will not last, as the forecasts for future surpluses is lower, at around 3% of GDP.
Luckily when DEFU came out earlier this month, I was bored and went back through the last 12 forecasts to see how actual surpluses measure against forecasts. And as I suspected Treasury is very conservative and systematically forecasts surpluses much lower than reality. Taking just the last five years.
00/01 in the 2000 budget forecast was a $1.012B surplus. Ended up $2.107B
01/02 in the 2001 budget forecast was a $1.376B surplus. Ended up $2.751B
02/03 in the 2002 budget forecast was a $2.228B surplus. Ended up $5.580B
03/04 in the 2003 budget forecast was a $3.761B surplus. Ended up $6.629B
04/05 in the 2004 budget forecast was a $5.671B surplus. DEFU has it already at $6.467B and final outcome over DEFU is normally an extra $1.5B so may make $8B.
The forecasts for the next four years are $6.2B, $5.3B, $4.9B and $5.4B. Not at all small surpluses, and this takes account of all of Labour’s bribes. Now in the last four years the actual surpluses compared to budget have been at 208%. 200%, 244% and 176% so one could well have surpluses into the region of $8B to $10B.
Of course until Dr Cullen announces otherwise, we will still have these Chicken Little warnings of doom if we should actually give taxpayers any of their own money back.