Last year’s surplus has been confirmed at $11.5 billion, indicating New Zealand missed a golden opportunity to reduce the taxation burden on New Zealanders.
Without even touching a cent of Government expenditure, the Government could have delivered multi-billion dollar tax cuts to taxpayers.
What this shows is that no matter how large the surplus, Labour will never deliver significant reductions in taxation, They see it as their money, not our money.
The more useful OBERAC surplus of $8.6 billion started life as a projected $3.854 billion surplus for 05/06 in the 2001 DEFU. The May 2004 budget said it would be $4.994 billion. At the start of the year in question it was projected to be $6.665 billion. And even just a few months ago in the 2006 budget it was forecast at $6.977 billion. It’s grown like a tumour – $1.7b in six to ten weeks from the budget in May to the end of the year at 30 June.
This reinforces my long held view that Treasury are far too conservative with their forecasting. It also indicates that any suggestion future tax cuts are unaffordable because of the relatively smaller forecasts over the next few years, should be ignored. The projected surpluses will double in size on average, plus they have a $2 billion per year slush fund included in them for new expenditure.
National has said that tax cuts will be incremental, and this is of course no different from the 2005 policy which was to be introduced over three or four years. But on today’s figures we should be talking about some pretty large increments – certainly much more than Labour’s 89c a week personal tax cuts.