Already the doubts over what Grant Robertson was telling us last Friday are spreading.
If you missed it last week, what I was trying to explain to him (and he wasn’t accepting) is that he is running his books dangerously close to the margin, that the forecasts are optimistic, and that it would take next to nothing for them to be out – and his $1.3 billion surplus would be gone.
His defence was that the Treasury are good at forecasting. No, they are not.
By the end of the week, as he presented his numbers and arguments at the business breakfasts to the economists, they were saying exactly what we are. His forecasts are optimistic, if not delusional.
If you want proof, this is how marginal it all is. The Budget has $168 million for the gun buyback scheme, the gun lobby think it’ll be closer to a billion. Robertson says if they’re right, they’ll cover it.
My question is with what? If it’s a billion, they have under-budgeted by $850 million. The surplus at $1.3 billion, minus $850 million, is less than half a billion. And in terms of the size of the economy it’s literally pocket change.
The $1.3 billion surplus is very tight. It could disappear either through lower economic growth and hence tax take or higher spending than budgeted.
The stand off with teachers over their pay claims has to be resolved eventually and that could really hit the bottom line.