National’s first Budget has accomplished its mission of avoiding a costly credit-rating downgrade. …
It may not be a black Budget but it is definitely a grey one.
It meets the first test of not doing any harm, in that it averts a credit rating downgrade.
Even if we had not had to worry about the rating agencies, the case for getting a grip on a scary projected debt and hauling it down was compelling for its own sake.
But it has come at a price. The Government has had to lock itself into a sort of fiscal chastity belt by slashing the allowance for future spending increases.
Tough, but fair. Tough enough to have satisfied, nay, perhaps even pleased the solemn-faced foreign financial gnomes from Moody’s and Standard & Poor’s. Yet not so tough as to scare the living daylights out of the average punter back home – at least not until he or she reads the fine print.
Finance Minister Bill English’s first Budget is not an economic game-changer but the first move in a Great Survivor exercise to get New Zealand’s creaky balance sheet into shape.
So far, English has succeeded. …
But nowhere is there any evidence (yet) of the bold growth-focused policies that must be developed if more companies are to be persuaded to build their international empires from New Zealand and more talented Kiwis are to be attracted to either stay or return here to build their careers.
The budget Bill English delivered yesterday was a difficult one not for the reason he gives, the global recession, but because the outlook in recent weeks has brightened a little. …
Mr English said the Budget’s aims were to “cushion the immediate impact [of recession] on New Zealanders and enhance future growth”. But he has gone mainly for the cushions. Growth-enhancing measures are modest by comparison with the deficits he projects for the next nine years and the debt that he will allow to rise to levels last seen in the mid-1990s. …
The recession has shown Labour’s spending levels to be unsustainable, and the more since Labour and National have indulged in a round of tax cuts. Hard decisions on welfare entitlements for the well-off, interest-free tertiary loans, free childcare and the like – decisions Mr Key and Mr English were proud to avoid yesterday – will probably have to be made. Maybe next year.
Nine years of deficits is simply too long. The world economy will surely have recovered in half that time. The Government needs to be looking beyond its cushions. The country needs to be awake and well geared for the first signs of recovery.
When Mr English was done, Labour leader Phil Goff stood. It took only two minutes of wrath before his face went a florid red and a vein in his forehead started popping. …
Prime Minister John Key was having none of that. He had a new nickname for Mr Goff – “whack it on the bill Phil” – and for Labour, “the credit card Opposition”.
“Whack it on the bill Phil would have seen us run up a quarter of a trillion of dollars of debt by 2023.”
The Government had a real opportunity with this Budget to show some political courage and make the hard decisions that would set a clear course towards higher productivity and a stronger society.
Instead, the Government has delivered a Budget that works on cost control across the board, without the more deep-seated changes in spending priorities needed to invest behind growth, and invest in people to avoid a social deficit.
I’m in meetings for the next six hours, so reactions from Stuff/Fairfax later in the day.