Tuesday, December 16, 2014

No surplus

Its official: we won't have a budget surplus this year. But Bill English is still delusional:

The Government believes an OBEGAL surplus is achievable this financial year, despite Treasury’s latest forecast today predicting a $572 million deficit (0.2 per cent of GDP) for the year to 30 June 2015, Finance Minister Bill English says.

“These forecasts emphasise the unusual conditions the New Zealand economy is experiencing,” Mr English says. “Treasury is predicting solid growth, growing employment and low interest rates, which help New Zealanders to get ahead. But at the same time, falling dairy prices and low inflation are restricting growth in the nominal economy and government revenue.

“This is making it more challenging for the Government to achieve surplus in 2014/15. However we remain on track to reduce debt to 20 per cent of GDP by 2020.

“Although this latest Treasury forecast predicts a small deficit for the current year, we believe the strong underlying economy and responsible fiscal management can deliver a surplus when the final government accounts are published next October,” Mr English says.

I guess that's why National are suddenly ripping $200 million out of DHBs: because achieving their arbitrary political target is more important to them than people getting the healthcare they need. And they'll slash and burn whatever they have to to do it. But given a choice between proper healthcare and delaying meeting that arbitrary target by a year, the latter seems to be an absolute no brainer. The purpose of government is not to deliver accounting surpluses, but to provide people with the services they need. Thinking otherwise is simply insanity.