The Dim-Post

May 28, 2009

Budget Reax

Filed under: finance,Politics — danylmc @ 2:59 pm

Audrey Young:

It’s the skinny budget. Bill English has just put New Zealand on a permanent diet. Even his Budget speech is shorter than previous years.

If Government departments and public servants were feeling the pinch as this Budget was prepared, be warned: it will get tougher.

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The Golden Weather is over.

David Farrar:

It is pretty orthodox, and as I said probably almost wrote itself. It isn’t a budget for closing the gap with Australia, or seriously rejigging the economy. It’s the budget you have to have first, before you can get to grips with some of the other stuff . . . The consensus amongst most media in the lockup seems to be that there wasn’t much else the Government could have done.

Vernon Small:

But the big surprises are in the extent of delays to tax cuts and future contributions to the Cullen superannuation fund.

Tax cuts planned for 2010 and 2011 are on ice, and are likely to be repealed under urgency tonight reversing their passing under urgency last year. Goodbye the flagship promise from the 2008 election campaign, though ironically Labour’s key spending promises – Working for Families and student loans for instance – have survived.

In the Budget lock-up English said tax cuts were unlikely to be reinstated this term, and would only be back when forecasts were “magnificently better”.

With 10 years of deficits ahead, that is a promise on the never-never.

If tax cuts are on ice, the Cullen fund is in the deep freeze. A deferral was expected, but no automatic payments till 2020? That is one step short of cancelling it altogether and is a “mere” four elections away. Not so much a promise as soothsaying.

Bernard Hickey:

Do we reduce the living standards of the baby boomers and ensure there are jobs and standards of living for Generations X and Y. Or do we tax the earnings of Generations X and Y more heavily so the baby boomers can retire in comfort.

Bill English and John Key have deferred the decision in the hope that the economy will catch their hail mary pass.

But decisions delayed can often make the final decision more painful.

Pragmatism won through in Budget 2009, but we may all pay in the end if someone doesn’t confront our core problem at some stage in the next couple of years.

Our economy has too much government and its taxes are too high and in the wrong place. Until we change that structure to make us more productive, we will forever be stuck facing decisions about robbing Generation X Peter to pay Baby boomer Paul.

John Armstrong:

Bill English has dished up a budget which is a bitter pill wrapped in sugar-coating.

He has managed to scrape together enough cash to deliver more in the way of short-term sweeteners than had been expected, boosting spending on such things as hospitals, early childhood education, research and development and even a Prime Minister’s Science Prize.

Enjoy it while you can. Because there may be some jam after all today but its bread and water tomorrow and thereafter. English has judged that after nine years of a Labour spend-up it was asking too much for the populace to go cold turkey but the message is clear: it is belt-tightening time.

Fran ‘Haldol’ O’Sullivan:

. . . English knows full well he has been persuaded by cruel circumstances to deliver a (Socialistic) Budget that would have made his predecessor Michael Cullen proud . . . the Government is still funding Labour’s election bribes like the frankly extravagant Working for Families and the student loans scam.

Colin Espiner:

I have to say I expected a bit more slash and burn than the Government has in fact delivered, and a quicker return to surpluses than the Budget documents actually indicate.

It took me quite a long while to get far enough back in the Treasury forecasts to discover that the so-called “decade of deficits” English railed against and in fact said was “unacceptable” is actually still there.

Yup, I’m not kidding. It’s difficult to find it, but way at the back of the document, Treasury admits that the operating balance will hit minus $9.6 billion in 2012 and is still not forecast to return to surplus until 2019.

If Budget 2009 was a tussle between English and Key over spending versus saving, I reckon Key won.

Kieth Ng:

Fiscal hawk says: YUSSS! In yo face!

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13 Comments »

  1. Love the mixed metaphors, especially John Armstrong’s.

    It sounds like English really had to walk a fine line between a rock and a hard place with this Budget. While it looks like he’s drawn a stand in the sand of spending, the ongoing deficits may be opening a can of worms that could come back to bit us in the ass. Key and English better start getting their ducks on the same page though if they don’t want Labour to hijack their thunder.

    Comment by gazzaj — May 28, 2009 @ 3:36 pm

  2. no mention of raising the retirement age which is no surprise. not something Labour or National will want to raise first.

    I’m very skeptical of talk of about intergenerational equity – I can’t see how that can be accurately measured, but with people living longer and more healthly it does seem imprudent not to raise the retirement age (given NZ’s current economic state).

    I suppose we now face the noisey circus of National loyalists cheeering unthinkingly (with from the notable exception of DPF) and Labour loyalists booing unthinkingly.

    Comment by Neil — May 28, 2009 @ 4:05 pm

  3. “National loyalists cheeering unthinkingly” well, other than whaleoil, who doesn’t have a kind thing to say about Bill (admittedly prebudget):
    http://www.whaleoil.co.nz/content/john-armstrong-english-must-master-tricky-balancing-act

    I guess the only way to get some of my money back is to install some more insulation and claim $1500…

    Comment by Clunking Fist — May 28, 2009 @ 4:14 pm

  4. …and the media spending most of their time trying to catch Key and English in a contrived contradiction

    Comment by gazzaj — May 28, 2009 @ 4:18 pm

  5. Haldol? What are you insinuating there, Danyl?

    Comment by George D — May 28, 2009 @ 5:00 pm

  6. Do we reduce the living standards of the baby boomers and ensure there are jobs and standards of living for Generations X and Y. Or do we tax the earnings of Generations X and Y more heavily so the baby boomers can retire in comfort.

    Income taxes based on age, as well as income? It’s certainly a novel suggestion.

    Comment by George D — May 28, 2009 @ 5:01 pm

  7. Actual public reaction:

    The Budget is at no. 4 on Stuff’s “most popular stories”. Still lagging behind “Women as keen as men for group sex”.

    Comment by sammy — May 28, 2009 @ 5:02 pm

  8. I would love it if people were just going straight to better sources than stuff for their budget news, but not holding my breath.

    Comment by StephenR — May 28, 2009 @ 8:12 pm

  9. I thought that a couple of months back, DPF was saying loudly that of course, National wouldn’t cut the tax cuts, because they were a promise. Changed his tune, neh?

    Comment by Deborah — May 29, 2009 @ 1:43 am

  10. http://www.nrc.nl/international/article2246821.ece

    The Dutch justice ministry has announced it will close eight prisons and cut 1,200 jobs in the prison system. A decline in crime has left many cells empty.

    Comment by mjl — May 29, 2009 @ 7:49 am

  11. Isn’t poor old David Farrar is remakably quiet today – What no graphs? No glowing testimonials to Bill and John? Its got to be the most clipped coverage I’ve seen of a budget since he started ‘fomenting happy mischief’ circa 2003.
    Isn’t this moment what being in government was meant to be about?

    Comment by hesnotajokeasjokesarementtobefunny — May 29, 2009 @ 9:50 am

  12. i’ll think you’ll find that DPF is either:

    a. still pissed
    b. too hungover to move or think without vomiting.

    Comment by Che Tibby — May 29, 2009 @ 10:05 am

  13. well yes, pissed, pissed off. I mean Labour was the devil who would cancel the tax cuts right?

    Comment by hesnotajokeasjokesarementtobefunny — May 29, 2009 @ 10:21 am


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