Monday, 4 May 2015

Bill English: Oh lord, give me surplus. But not yet.

Being a good Catholic, Bill English should be familiar with St Augustine’s famous prayer as a young man: “Oh Lord … give me chastity and continence, but not yet.” 

In fact, he may not just be familiar with it: he may have adopted it as his own prayer regarding the ever-disappearing surplus – ever-receding in a manner akin to Augustine’s elusive chastity.

They both have excuses but -- like the young hedonistic Augustine -- English is none too resistant to temptation. In his case, the temptation to spend and for that spending to continue to grow*. And, like Augustine, English continually blames others, or fate, or god, for his failure to achieve the goal on which he hung a very loud election promise not so very long ago.

His latest excuse, about which he is once again surprised: inflation:

The Treasury now expects nominal GDP over the next four years through to 2019 to be around 1.5 per cent lower than forecast in Budget 2014 – mainly because of lower inflation.
That is about $15 billion less …
    Consequently, the Government is collecting less tax…

English has now been similarly surprised seven times in a row.

Two things. First: Note the excuse of GDP being affected by inflation?  But GDP is supposed to adjusted to reflect inflation (as measured by the failed CPI), so this doesn’t ring true. Perhaps it is more true that, as inflation leaps rather than gallops, fewer income-earners see the tax-bracket creep associated with more heroic inflation levels that allows the Treasury to surreptitiously steal more from rising wage packets.

Second: Does this mean English plans to spend less this year? No, not a bit of it.

In total,” says English  Treasury now expects the Government will collect $4.5 billion less tax revenue over the next four years than it expected at the last Budget…
    So despite the downturn in revenue, we will stick with the $1 billion annual operating allowances for Budgets 2015 and 2016.

In other words, come election time I will continue to mouth platitudes about surplus, while continuing to borrow several-hundred million a week to keep my party’s addled spending addiction going.

Augustine, for all his many sins, finally found austerity.

I doubt Mr English ever will.

And meanwhile, NZ’s government debt continues to grow ….

* “In 2000, core government expenditure was $34 billion, but 11 years on that has grown to $73 billion. Core government spending now makes up more than a third of the New Zealand economy. Once you add in local government, that pushes the government sector to over 38 per cent of gross domestic product.” – Bruce Wills, NZ HERALD, 2012

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