Tuesday, December 18, 2012


The Half Year Economic and Fiscal Update is out, and as expected it projects National making its self-imposed target of a surplus in 2015 - but only due to a last-minute tax increase. I'm not actually that concerned about the latter - its entirely appropriate that the people who use the roads pay for them, and treating National's boondoggle "Roads of National Significance" as an extra expense requiring additional taxation is certainly fairer than paying for them out of the general pool. At the same time, it also shows the drain that this boondoggle is putting on our society, and for what? The roads National is building have negative rates of return, that is, they cost more than they deliver in economic benefits. It would be better to simply cancel them.

Meanwhile, Treasury's long-term projections show unemployment over 5% until 2017, declining labour-force participation rates, and spiralling debt. When Labour was in government, they delivered us a positive net international investment position (that is, the government had more invested overseas than it owed). When National leaves office, we will be back to owing 75% of GDP overseas. If this is National's "brighter future", they can shove it.

Still, there is one positive thing in Treasury's projections: they've given up on their nonsensical projection of high wage-growth in a time of high unemployment. This has featured in the last two Budgets, and has allowed them to project higher tax revenues (and therefore a surplus). Now at least we have the truth.