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Better Public Services
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Bill English
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Debt
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NZ Herald
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The Budget 2014
The Herald is generally content with Bill English's Budget. Under the headline
Budget steers safe course in rough waters the Herald's editorial opines:
The Treasury gave the show away in the Budget's supporting documents, mentioning that while tax revenue is running at a lower level than expected, some of the Government's intended spending has been "rephased" to produce the surplus it has promised. Opponents can call it a trick of "smoke and mirrors" but the verdict that matters comes from credit agencies. They are unlikely to be concerned. Spending rephased is spending we might never see unless surpluses can be maintained.
The Budget manages the election-year trick of appearing both fiscally responsible and socially generous. The provision of free medicine and visits to doctors for children under 13 is the main surprise. It is not restricted to families on lower incomes, it will be equally available to those who can easily afford to pay for their children's medical needs. It is not the most efficient use of funds for health, which absorbs an ever increasing slice of the annual Budget.
By contrast, a parental tax credit is to be increased by $70 a week and extended from eight to 10 weeks but it will be better restricted to low and middle income households. As expected, paid parental leave is to be extended from 14 weeks to 16 next year and 18 the year after. It will also become available to those in seasonal or casual employment or who have recently changed jobs.
Those are the main gifts in a Budget that reflects a good economic outlook. It is based on expected growth of 4 per cent this year, 3 per cent next year and 2 per cent for each of the following two years. Even so, despite surpluses, it does not bring net debt under 20 per cent of GDP in the forecast period.
That Bill English has kept the credit ratings agencies happy is important. They will be encouraged to see the economy return to surplus, and to hear Bill English's commitment to getting debt down to less than 20% of GDP in the long term. That is a positive target, given that in 2009, debt was forecast to blow out to over 60% of GDP within a few years. Mr English deserves credit for avoiding that.
The Herald is also highly complimentary of Bill English's ability to get state services doing more with less:
The Budget's best feature is the value Bill English seems to be getting for little extra spending on public services. Departments know the results he wants and seem to be delivering them without complaint from providers or the public.
They have stopped demanding endless increases in funds and he shared the credit with them yesterday for his surplus.
Doctored it may be, but it will get better.
The Government sent a strong message to the public service early in its first term that there was not a bottomless pit of money for the kind of growth that occurred in the back half of the Clark/Cullen years where Government spending increased by 50% in five years. National's Better Public Services programme has required state sector CEO's to look at the way in which their departments ran, and to eliminate waste and duplication. This is perhaps Bill English's biggest success.
The last six years have not been fun for those of us in business. There are much more optimistic times ahead however, provided that Bill English's "steady as she goes" policies are maintained, and there is no return to wasteful, inefficient government expenditure.
