0 Finlayson on "financial illiteracy"

Jacinda Ardern is widely regarded as a future leader of the Labour Party. But she's been sent back to school by Arts, Culture and Heritage Minister Christopher Finlayson.

Ms Ardern has been critical of apparent reductions in arts funding in the Budget, and has repeated her criticisms despite them having been proved to be false. So Finlayson sent out a very terse presser yesterday; here 'tis:

Christopher Finlayson

23 May, 2014

Labour once again shows its financial illiteracy

Jacinda Ardern has yet again shown why New Zealanders do not trust the Labour Party even to read a Budget correctly, let alone write one, Minister for Arts, Culture and Heritage Christopher Finlayson said today.
Ms Ardern has made numerous incorrect statements about arts funding in Budget 2014, despite these errors being repeatedly pointed out in Parliament and online.
“The supposed ‘cut’ to public broadcasting claimed by Ms Ardern reflects the fact that last year $4.5 million was spent on the Going Digital project, helping the switch over to digital television,” Mr Finlayson said. “That spending is not in the budget this year, because, well, we have Gone Digital.”
“We have in fact allocated extra funding within public broadcasting on new projects, including the maintenance of the TVNZ archives.”
“There is no reduction in heritage spending, as she has claimed. What may have confused Ms Ardern is that heritage now appears in two appropriations, one of which is earmarked for World War One centenary commemorations, a key heritage project. The total is slightly higher than last year.”
“In future, perhaps she should read further down the page before firing off indignant press releases.”

Mr Finlayson is regarded as one of Parliament's best debaters. He also writes a pretty good presser. And he goes on to remind those receiving his media release that Labour is vulnerable over another arts issue; the film industry:

“Funding for regional museums has been maintained throughout the two terms of this government, and remains at its baseline funding of $6.67 million per year," Mr Finlayson said. "However, last year the appropriation was higher because unspent funds from the previous year had been carried over. This is spelled out in the Supplementary Estimates of Appropriations.”
"This government has revitalised the screen industry, a point she obscures. We saved the production of the Hobbit trilogy in New Zealand from the unions, and have ensured that not only will three Avatar sequels be filmed here but that the production will employ New Zealanders in key roles."
"This is quite aside from the important recent structural reform of the Arts Council and Heritage New Zealand (formerly the Historic Places Trust), which were ignored by the previous government."

Readers will remember Labour being labelled Hobbit-haters; a reference they fully deserve. In siding with the trade unions representing actors, Labour was complicit in the making of the movies almost not happening in New Zealand.

Readers may also remember the hypocrisy that followed, best illustrated in this photograph of Grant Robertson and Ms Ardern basking in the glory of a walk along the red carpet at the Hobbit premiere in Wellington.

Hobbit-hating is bad enough. Repeatedly making accusations that arts funding has been cut when it hasn't, and when the accuser has repeatedly been told she is wrong is even worse. Mr Finlayson has a final word for Jacinda Ardern:

"National politics is not high school,” Mr Finlayson said. “Jacinda Ardern shouldn't think professing to care about the arts means she can opt out of  maths."

Quite so Mr Finlayson. Maybe the Labour Party needs to admit another mistake, and get back the Treasury assignee to scrutinise their media statements and policies, and to help Labour MP's to understand the Budget. There have been so many gaffes from Labour this year alone that any numbers or dollar figures that the party presents must be taken with a truckload of salt.

Jacinda Ardern is clearly an advocate for the old adage to never let the facts get in the way of a good story. She will have to do better than this is her early promise is to be realised.

0 Quote of the Day - 17 May 2014

We won't copy vast tracts of Fran O'Sullivan's excellent column in this morning's Herald. We simply suggest that you go here and have a read for yourself.

But this portion stuck out, and is our Quote of the Day (with our emphasis added):

These post-Budget lunches are a marquee event on the business calendar. They are where Key not only explains the Budget but also charts the future in a compelling way designed to engender confidence so business people keep on investing, venturing out into the world to tackle tough markets - and employing staff.
The protesters outside the Sky City Convention Centre didn't get this.
The people who slagged off the guests (for instance - the business organisation leader accused of being a "bloated capitalist") don't seem to get it that business success ultimately underwrites jobs.
The protesters disregard the fact that many New Zealand businesses were put through the wringer by the Global Financial Crisis. People have worked hard to get their firms on to a sufficiently sound footing that they are now confident enough to take a few risks and grow their businesses.
It's a good space for New Zealand to be in.
The protesters were so dumb that they hadn't worked out that the business guests who openly walked past them to take another route into the centre were doing so for a purpose.
Instead they charged a door that was never going to be opened to them or anyone else.
This misjudgment is not confined to protesters.

Fran O'Sullivan is spot on. The protestors yesterday seem to have forgotten that the Budget invests $500m into families via  a range of measure. There wasn't much in it for the "bloated capitalists" who do most of the employing in New Zealand. As one wag put it yesterday, that's what happens when you organise the post-Budget protest pre-Budget!

And Labour has misjudged John Key ever since he entered Parliament almost twelve years ago. The underestimated him as he became National's Finance spokesman where he frequently got the better of Michael Cullen, and when he became Leader of the Opposition. 

Helen Clark thought that the Leaders' Debates against Key in 2008 would be a doddle. Instead it was she who lost the plot, famously accusing the PM-in-waiting of having to shout down his family at home. Key saw of Ms Clark, followed in quick succession by Phil Goff and David Shearer, whilst David Cunliffe shows no signs of having learned anything.

Long may the Labour Party continue to misjudge and underestimate John Key.

0 The ODT on the Budget

We've heard what the NZ Herald editorial had to say about Bill English's sixth Budget. Let's head to the other end of the land; the ODT opines:

Budget 2014 was handed down yesterday without much fanfare.
We all knew it was coming, of course, and most believed the pre-Budget hype of a predicted surplus after six years of fiscal restraint.
Many hoped there would be some loosening of the purse strings. Finance Minister Bill English has largely delivered.
This was the Budget that National - right from the time of its re-election in 2011 - would have hoped it could produce leading into this year's election.
Mr English has not swayed from his path of fiscal restraint. Sure, he has had to borrow heavily during the past six years, but not to the extent the country plunged into recession.
Now, the return to surplus gives options such as paying down debt.
The careful management of the country's finances by Mr English, and his team of ministers, has helped ensure New Zealand has been mainly immune from the worst of the global decline affecting Europe, parts of Asia, the United States and, latterly, Australia.
Economic growth has been one of the highest in the OECD and, for once, all Treasury indicators are pointing in a positive direction.
This was a Budget of few surprises, but with enough good news to count for something. 

Dunedin isn't quite Dipton, but the good folk of the South are generally fiscally conservative; a nod to a strong Presbyterian influence in days gone by. And the ODT leader writer seems to like the prescription dished up by Mr English yesterday.

After dissecting a few of the measure in the Budget, the ODT editorial concludes thus:

Budget 2014 is a clever document, with thoughtful spending alongside continued moderation.
It will enable Prime Minister John Key to go into the election campaign confident his 2008 promises of fiscal restraint, providing the best care for families, and delivering a better public service have not been compromised.
Opposition parties will have to promise big to counter National, and if they do, the onus will be on them to say exactly how they will fund those promises.
This is Mr English's sixth Budget. If National is re-elected in September, what are the odds Mr English will not be there to deliver the next three?
Given the return to surplus, it would be no surprise if he delivered one more, perhaps to prove to doubters a surplus is possible, before standing down and perhaps leaving Parliament for a future overseas.
If he is looking for a document to define his legacy as Finance Minister, Budget 2014 is a good place to start.
There is some criticism the Budget is too conservative, but that personifies Mr English, who learnt the trade from former finance minister Sir William Birch. And would most New Zealanders rather have a gambler as a finance minister, or a safe pair of hands?
The ''Boy from Dipton'' has lived up to his reputation as a ''conservative'' politician in every way. 

We most certainly don't want a yeah-nah gambler such as David Cunliffe leading the next Government. Nor do we want the Greens within a bull's roar of the levers of power, let alone the nation's coffers.

John Key and Bill English set out a plan when National was elected in 2008, and the economy was heading downhill at an alarming rate. Bill English has taken a consistent, pragmatic and conservative long-term view, and that has proved to be the right recipe for the times. 

New Zealand's economy will return to surplus in 2014-15, and Bill English can rightly claim the credit for his unwavering focus on his plan. As the ODT notes, this Budget will define his legacy as Minister of Finance; a Decade of Deficits turned around in just six years.

0 Soper on Cunliffe and fudge

Barry Soper's Soapbix editorial piece on Newstalk ZB is a nice mix of fact and satire. And he's certainly seen through David Cunliffe's fudging yesterday. Under the heading Cunliffe fudged his budget reaction Soper opines:

Politics in this country is a funny old business. If you're on one side of the fence you'll always complain about those on the other side, regardless of what they're doing or saying.
'The Dipton Drawler' Bill English could have delivered election year winners like free healthcare for all, free education - including university, free rest home care for the elderly, an increase in the minimum living wage to $20 an hour and the immediate settling of all Treaty claims and still his opponents would complain and probably claim he was being irresponsible.
As it is, he wandered into Labour's patch by spending half of the $1 billion he'd earmarked for splashing out for his sixth Budget on families. Paid parental leave is being increased by four weeks, kids under 13 will be able to go to the doctor for nothing and even registering your car's going to become more than $100 cheaper. They're just a few of the election sweeteners on offer.
Labour's bitterly complaining though. The complaint that The Tories are looking after their rich mates is a little difficult to fathom and so is their chant that it's a 'Cabinet Club annual report'. 
It's doubtful the donors to the Tories will be popping the champagne corks over this one considering the top 12 percent of wage earners are paying more than half the tax.

We agree with Soper about the "Cabinet Club" Budget. As we blogged earlier this morning, the speech that Russel Norman delivered yesterday bore little relativity to the Budget delivered by the Dipton Drawler, Bill English. There certainly wasn't much in the Budget for John Key's Rich Prick mates. It hasn't stopped a sell-out crowd from paying to hear the PM at Sky City this afternoon, even if they had to get past rent-a-mob first.

But it is David Cunliffe for whom Soper has saved his best:

'Martin Luther' Cunliffe was thumping the tub and came up with what sounded like a good line describing the offering as a 'Fudge-It Budget'. The trouble is that it's the same line used back in 2002 by Rodney 'Thick' Hide to describe 'Savage Mickey' Cullen's Budget, although Hide was a little more inventive when he said it was sickly sweet with no substance.
Clearly Cunliffe thought he could get away with it but hadn't counted on the man sitting beside the fulminating John Kiwi. Bill English was the Tory leader back then and Cullen's 'Fudge It Budget' didn't seem to do Labour any harm. They trashed National to it's biggest ever defeat.
So if that's the success of 'Fudge-It Budgets', then The Drawler will be laughing all the way to the ballot box! 

Quite so. David Cunliffe's speech yesterday was big on the theatricals, but lacking in substance. Nor was it a Phil Goff vein-popping special, or a clinical Helen Clark performance.

Instead David Cunliffe, as Soper notes, fudged his opportunity, recycling his description of the Budget in the same way that Labour is recycling the policies that were strongly rejected in 2011. Perhaps Mr Cunliffe needs to give up on the recycled fudge, and go and get some honey from his Herne Bay beehive, because on the basis of yesterday's performance, that's the only beehive in his immediate future.

0 The Herald on the Budget

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.

0 Quote of the Day - 16 May 2014

We won't inflict 15 minutes of Winston Peters on you this morning. But the NZ First leader did, perhaps unwittingly, provide on of the more memorable quotes yesterday with this piece of logic:

"We're going back to the glory days of the past for a better tomorrow" 

Mr Peters was talking about how a Winston First government would reform the economy, We're still not quite sure exactly what he means!

0 A tale of three leaders

Here's what the three "double-figure" party leaders had to say about yesterday's Budget. First up was David Cunliffe:

Mr Cunliffe's speech was predictable, but his delivery remains wooden and stilted. After watching the Campbell Live "At home with.." piece on Monday night, we've noticed that the Labour leader's voice when speaking in public in considerably deeper than his normal tone, and yesterday he seemed to be overdoing that. And his lines were unoriginal; "fudge-it Budget" was used by Mr Cunliffe to describe Budget 2010, and even then it had been pinched from Rodney Hide in 2002!

Next up was Prime Minister John Key:

The PM's speech was far more relaxed than that of the Leader of the Opposition, and John Key took a few moments to  gently chide his nemesis suggesting that Mr Cunliffe was as effective as Benji Marshall had been at the Blues, and had as many supporters in the Labour caucus as Brendan Horan had in his caucus. He used the rest of his time to extol the virtues of the Budget and the return to surplus, and was lavish in his praise for Bill English's stewardship over six demanding years.

Finally, there was Russel Norman:

We can only conclude that Dr Norman's speech was written prior to the Budget being presented. His constantly referred to it as the "Cabinet Club Budget", the the point where had viewers been playing a drinking game, they would have been legless after two minutes! Far from being a Budget for the PM's "rich mates" as Dr Norman alleged, the most commen criticism we have seen of the Budget is that it leans too far to the Left!

If the far Left and the far Right are critical of the Budget handed down by Bill English yesterday, then he probably got the mix about right. The surplus is somewhat larger than forecast, and with growth of 4% being forecast in the out years, New Zealand is in good economic shape, especially when compared to our trans-Tasman neighbours.

0 The Budget 2014

Courtesy of DPF, who has taken one for the team by sitting in the Budget lock-up for three-and-a-half hours, here are some of the key numbers from Bill English's sixth Budget:

Forecasts

• Growth to almost hit 4%
• An extra 170,000 jobs by 2018
• Average annual wages to go up by 14% to $62,330. Inflation projection is 10% over four years so net 4% gain.
• Budget surpluses to grow from $372 million to $1.3 billion in 15/16 and $3.5 billion in 17/18
• Net debt to be under 20% of GDP by 2020
• NZ Super Fund contributions to resume in 2019/20

The growth projections are positive, and are the most important aspect. Without economic growth, a surplus becomes a deficit. The projected increases in jobs and real wages are also a positive.
The net debt to be under 20% by 2020 is a huge turnaround. The last projection in 2008 had it ever increasing to 70% or so.
However the surplus is still fragile. There isn’t any wriggle room in 2014/15, but I believe 2015/16 should have room to consider tax cuts.
Last year

• 84,000 more jobs
• Average weekly wages up 3.2%
• Inflation has been 1.5%, so real increase in average wages is 1.7%

This Year

• New spending of $5.7 billion over four years, including $1.6 billion of reprioritisation ore revenue measures
• Budget surplus projected to be $372 million
• Operating allowance of $1.5 billion a year, growing at 2% a year, Under Labour they ranged from $2 billion to $7 billion, averaging $3.5 billion over last five years – so under half the previous rate

DPF also notes significant areas of new spending and investment:

Families

• $500 million more spending on families
• Additional four weeks paid parental leave (to 18)
• Parental tax credit goes from $150 a week to $220 a week and from eight to ten weeks for $42 million
• $90 million more to extend free GP visits to under 13s
• $156 million more for early childhood education
• $33 million to assist vulnerable children

This is the major focus. The paid parental leave was well signalled. The extending of free GP visits to under 13s was a surprise (and a better policy than merely paying more to parents), as was the extra $1,000 for the parental tax credit.
Education

• $858 million over four years more spending
• $359 million to pay top teachers and principals more
• $85 million more for school operations
• $11 more for school property

No extra details on the package announced in January around up to $50,000 per year more for the top principals. Lots of interest in the final package.
Health

• $1.8 billion more over four years
• $110 million more for 4,000 more elective surgery ops
• A new Grey Base Hospital for $200 million a week (??? Our query!)

Tony Ryall remains determined not to have Health become an area of weakness for the Government.

Bill English is concerned about future Government spending fuelling rises in interest rates, and has followed Treasury advice in capping new spending at $1.5b in 2015, with modest percentage increases in future budgets. This is interesting, and will certainly put pressure on the opposition parties to either not promise outlandish spending, or to provide information on how the risk to interest rates will be mitigated. Mr English is showing his canny Southlander credential!

There's nothing too controversial in Budget 2014, and the wafer-thin surplus that was predicted by many is more the thickness of a slice of toast bread. It is however an achievement of which Bill English can be justifiably proud.

We'll have more reaction later in the day once the party leaders give their verdicts. David Cunliffe will be the first to speak, followed by the Prime Minister and then the minor party leaders. The Budget Debate is always robust, and with this being an election year Budget, the debate will be even more robust than usual. In some ways, the election campaign begins this afternoon.

Stay tuned for more.

0 The Bill & Steve Caption Contest

Bill English delivers his sixth Budget in around 90 minutes. So what is he saying to Steven Joyce, his right-hand man, in this picture?

And then there's David Cunliffe, but he's in black and white. What might he be thinking?

You know the rules; keep 'em short, pity, amusing and to the point, and don't get unnecessarily personal. Other than that, you're limited, as ever, by your own imagination.

The floor is yours...

0 Budget Day - 15 May 2014

It's Budget Day, and it's an especially significant one for Bill English. After five years of having to balance competing expectations with not enough money to go round, he gets to deliver a budget surplus today. Little wonder that he's smiling in the time-honoured pre-Budget photograph at the printer!

In her preview piece in the Dom-Post, Tracy Watkins suggests this bodes well for the John Key-led Government; she opines:

New haircut, smart blue tie - Bill English was even cracking a big smile ahead of today's Budget. 
It has been a long time coming. After six years, a global recession and a devastating natural disaster, the finance minister will announce today that the books are forecast to be back in the black for the first time in seven years.
If the coming election is a referendum on National's economic stewardship, then today's Stuff.co.nz/Ipsos poll suggests voters give it much better than a pass mark, with 69 per cent rating it as doing a good job on the economy.
With the Budget expected to tip surging growth and falling unemployment, that will prove a potent recipe in National's favour at the ballot box, when it will urge voters not to put the gains of an economic recovery at risk by voting for a change of government. 

The opposition parties showed their hand yesterday. The new opposition buzz-word is "inequality", with claims that the rich have got richer and the poor have got poorer. Politicians will doubtless argue the figures until they are blue in the face, but it is inarguable that a healthy, growing economy provides the best platform to deliver benefits to every New Zealander. And a healthy, growing economy is what Bill English is going to forecast this afternoon.

Unsurprisingly, we have planned our day so that we will be watching from the couch when the Budget is delivered, and we'll be blogging accordingly. We don't think that there will be any major surprises this afternoon; Budget announcements these days are drip-fed in the weeks in advance of Budget Day. But we expect health and education to be the two major areas of focus.

John Key interestingly dangled the possibility of tax cuts to middle income earners yesterday as a longer-term option. That certainly contrasts with Labour's plan to create equality by taxing those who dare to earn a reasonable income, and could create a significant policy difference on the campaign trail in coming months.

But this is Bill English's day. Faced with an economy in rapid decline when he became Finance Minister in 2008, and with Treasury forecasting deficits for the next decade at least, his conservative stewardship has returned New Zealand to economic surplus in six years. He's entitled to a few smiles today.

0 A tale of two polls

The Left was cock-a-hoop at the end of last week when the notoriously variant Roy Morgan poll showed Labour/Green ahead of the National Party. But this morning, the bubbly can go back on ice.

Stuff has released the latest Fairfax-Ipsos poll, and it makes grim reading; that's if your name is Cunliffe, Norman or Turei. And if your name is Peters, or any other NZ First MP, you'll be dusting off your CV ready for a return to the job market in October. Tracy Watkins has the grim details (for those mentioned above, and their supporters):

National has shrugged off weeks of scandal and is riding high in today's Stuff.co.nz/Ipsos Political Poll.
With Finance Minister Bill English poised to unveil tomorrow what he hopes will be an election-winning Budget, the poll suggests there is no need to pull any rabbits out of the hat.
It puts National on 47.6 per cent support, down 1.8 percentage points on our last poll, but still enough to govern alone if the results were mirrored on election night.
Labour has slipped to 29.50 per cent, taking it below the morale-busting 30 per cent threshold for the first time. 

The Fairfax-Ipsos poll has tended to flatter Labour. Whereas other polls have had David Cunliffe's team fluctuated above and below the 30% line since the 2011 General Election, Labour has held its ground in this particular poll. Until this morning, that is.

And Tracy Watkins predicts a new round of naval-gazing in the War Room:

Today's result is likely to cause soul searching within Labour, however, over leader David Cunliffe's failure to get traction against Key despite the succession of ministerial scandals.
The poll shows Cunliffe sliding in the preferred prime minister stakes to 13.4 per cent, down 3.9 points from our last poll in February and well behind Key, who is on 48.6 per cent. Labour also suffered a blow during the polling period with the news that former leadership hopeful Shane Jones is quitting Parliament. But Labour's biggest enemy may be the improving economy, with the poll showing 63.6 per cent of voters believe the country is on the right track. 

Indeed. Bill English is set to announce the economy is back in surplus for 2014-15 when he delivers tomorrow's Budget, more people in New Zealand are in work than at any time in the country's history, manufacturing and exporting is humming, and tourists continue to visit New Zealand in record numbers. Bill English and John Key have a strong platform from which to campaign for re-election.

Here's how the parties stack up:

Ms Watkins notes that the Greens seem to have picked up some "soft" Labour support, whilst NZ First is going nowhere. Winston Peters is going to need more than a luke-warm spud gun to gain any traction, as Labour threatens to trump him with anti-Chinese rhetoric.

John Key and Bill English will be feeling positive ahead of tomorrow's Budget, and they have every right to be. Bill English has steered the economy through the worst recession since the Great Depression, and the waters ahead are calm, especially compared to the heavy seas facing Australia. Why would any sensible voter put that at risk?

0 Budget week - part three

The Herald describes tonight as "crunch time" for Australian Prime Minister Tony Abbott. Federal Treasurer Joe Hockey will deliver the first Budget of the Abbott era, and there's a lot riding on it:

Tonight is make-or-break night for Prime Minister Tony Abbott as his Government reveals its first Budget to a nation that is expecting the worst.
How Abbott has framed his economic strategy and how he markets it to voters will define his first term and, possibly, determine whether he wins another. He will present Labor with a huge political target of broken promises that will fuel the Opposition's rhetoric for the next two years. Breach of faith is not easily forgiven by the electorate, especially when it hits their hip pockets.

Tony Abbott and Joe Hockey will be understanding just how John Key and Bill English felt when the books were opened to them after the 2008 General Election. The New Zealand economy was then in freefall, having gone into recession in the March quarter of 2008, and continued in recession in the two subsequent quarters. And this was before the Global Financial Crisis bit deeply.

Australia survived the GFC relatively well via some novel stimuli applied by the Rudd-Gillard-Rudd Government. But much of it was artificial, and the writing was on the wall this time a year ago. We blogged about it at the time; having forecast a surplus of of $1.5 billion, Wayne Swan instead delivered a deficit of A$19.4 billion; a A$21b turnaround in the space of a year. 

By the time Australia went to the polls in September and kicked Labour out of office, things had got even worse, and incoming Treasurer Joe Hockey abandoned the plan to be back in surplus by 2016-17. We will find out the long-term outlook for Australia when Joe Hockey delivers the bad news tonight.

Abbott and Hockey have little option but to go for the jugular tonight, and hope that one awful Budget will buy them time with the voters; the Herald continues:

Abbott is clearly betting on voters' short memories, hoping that by slugging them so early in the political cycle the pain will ease and, with an improving economy, reduce the threat of retribution at the next election.
Treasurer Joe Hockey has included a bit of sugar: twice-yearly increases in the fuel tax will fund A$40 billion in roads programmes, matched by the states and private business; the debt reduction levy will hit only high-income earners; politicians and senior public servants will go without pay rises for a year.

Other sweeteners may also emerge tonight. But the politics centre on whether any economic gains emerge in time to offset the bite of cuts to some of the most sensitive areas of government spending.

It's little wonder that emigration from New Zealand to Australia has slowed down, and that more and more Kiwis are returning from what was once referred to as the Lucky Country. That was evidenced in last week's Household Labour Force Survey result, where although the number of people in work hit a record level, the actual rate of unemployment was unchanged. 

Bill English's sixth Budget on Thursday is going to be far more encouraging than Joe Hockey's first. Mr English will doubtless remember how difficult his own first Budget was in 2009, and we're sure that he will have sent an encouraging word to his Australian counterpart.

We will have the details and reaction to the Australian Budget tomorrow.

0 Budget week - part two

It's Budget week both here and in Australia. Australians will get the bad news from Joe Hockey tomorrow evening, whilst New Zealanders will have a far rosier picture painted by Bill English on Thursday afternoon.

In an editorial headed Australians must envy our Budget the Herald opines:

Budget week in Australia and New Zealand normally finds the two countries in a similar economic condition, with Australia looking the stronger. Not this week. Australia's Budget, to be delivered tomorrow, will be an answer to a projected decade of deficits. It is five years since New Zealand heard that phrase from John Key and Bill English, the first since the recession and global financial crisis.
It will be small, so small that it could easily disappear before it can be banked next year. Despite the economy enjoying 3 per cent growth at present, tax revenue is running below the Budget for the current year.
The deficit for the nine months to March was nearly $200 million worse than forecast, better than the $900 million shortfall to February but still a worry when the economy has so much going for it.
Dairy prices have passed their peak but the Christchurch rebuild is still providing a stimulus. The Reserve Bank has begun lifting its base interest rate back to normal levels but that should not be enough to choke the growth spurt.
Wage rises are outpacing inflation and consumer confidence remains strong. In fact, the conditions are right for the Government to present a more far-sighted path of economic development than it has so far.
It needs to give voters a reason to return it to power in September for a third term. A surplus will be a signal achievement, especially after absorbing $15 billion of the Christchurch repair bill, but it is a signal of spending controls so far. An election year Budget needs to look ahead.

We're sure that Bill English's sixth Budget will "look ahead". Firstly, it will look ahead to a small surplus in 2014-15, to be followed by significant surpluses in the years that follow. That will give whoever is elected in September room to move, but not to ramp up Government spending as Michael Cullen did in the latter part of the Clark years.

It's a far cry from the situation facing Joe Hockey across the Tasman:

Across the Tasman, Prime Minister Tony Abbott and Treasurer Joe Hockey must envy their New Zealand counterparts. They will deliver their first Budget tomorrow without a consensus of economic support for the austerity they argue Australia needs. Severe cuts to health, welfare, education and other sensitive areas of spending are a possibility, as well as a possible "deficit reduction levy" on high incomes.

And whilst the Herald's leader writer expects opposition parties to apply the usual derisory labels to Bill English's forecasts on Thursday, there is some very positive comment on the Government's economic performance:

New Zealand's public debt went well above 20 per cent with the costs of the recession and the earthquakes. The Government's aim to have it back down to that level by 2020 will require annual surpluses every year from here on. Opposition parties will call the surplus "smoke and mirrors" on Thursday.
It is a phrase easy to apply to a figure built on forecasts rather than cash in the bank. But if they do not believe the forecasts they have less room to go to the election with proposals requiring additional spending.
The Budget ought to give an indication of the Government's use of surpluses over the next few years. On Friday Mr English suggested that as well as repaying debt the Government would boost spending in its social priorities and eventually resume contributions to the NZ Superannuation Fund.
Its pre-Budget announcements in recent weeks give the flavour of those priorities: $20 million more for apprenticeships, $20 million to fight rheumatic fever, $3000 grants for unemployed beneficiaries to go to Christchurch. The sums are not large but the projects are practical and precise. That has been the secret to the return to surplus: not painful cuts but a focus on results.
It seems to be working.

It does indeed seem to be working. Which begs the question; with Bill English having shepherded New Zealand's economy through the deepest global recession since the Great Depression, and with New Zealand now leading the world into economic recovery, why would anyone want to take a punt on a big-spending Labour-led government which can't even get its most basic sums right?


Footnote: We will focus extensively on the Budget this week. John Key and Bill English have an excellent record on which to go to the country in September. Little wonder they're smiling!

0 Budget week begins

Bill English will deliver his sixth Budget on Thursday afternoon. Having inherited an economy predicted to be in deficit for at least ten years after the 2008 General Election, he is tipped to deliver a small surplus in 2014-15, with larger surpluses to follow in following years. New Zealand's economic outlook has not been brighter for many years.

It's a different story on the other side of the Tasman. Australian Federal Treasurer Joe Hockey is facing a nightmare with the Aussie economy tanking while others like ours recover. That's a legacy of the free-spending Rudd/Gillard/Rudd government that Australians kicked to touch a year ago. The Budget Mr Hockey has to deliver on Tuesday night is going to cut deep.

National held its Mainland Regional Conference at the weekend in Queenstown. And here's what Steven Joyce reminded the assembled delegates:

Steven Joyce is dead right. When New Zealand voters make their choice in September they will face the choice of an economy in recovery under Bill English, at least four years ahead of schedule, or an economic recovery that will run into a brick wall if the Government changes to a big-spending, big-taxing LabourGreenNZFirstMegaMana monster.

We know what our choice is going to be.