Budgets are essentially political documents, particularly in election year, and this year even more so because the Minister of Finance thinks the Government can have a bit of a spend up while proclaiming the need for restraint and praising themselves for the restraint they have shown.
The spending that has been sanctioned, particularly the family assistance package worth $500 million, goes to the political heartland of the National Party, the middle of the middle class who think they both need and deserve state assistance. There is also a good dollop of dough for sore spots and pet likes Christchurch and schools in North Canterbury, and for some projects of cultural merit like buying the TVNZ Film Archive.
The Minister of Finance also neatly frames the expected debate over election promises. His budget speech states that Treasury advice is that additional spending over the $1.5 billion the current government has allowed itself will boost interest rates. Our prediction is that National will use this to bash Labour and other parties if those promises (spending and revenue reductions) go over the Treasury determined figure. That is consistent with National’s narrative that the country cannot afford a Labour/Greens government.
Our criticisms and quibbles:
So is this a good budget for the country? It’s certainly a well-calculated action plan to get the National government re-elected, but there’s little prospect of reduced government spending, substantial tax cuts or significant reform of spending.
To convince this Government that government is too big in New Zealand and the tax burden should be reduced, we must continue to pressure our politicians to share the benefits of the improved economy with all taxpayers.
Budget 2014 is now public. The Taxpayers' Union had two people in the budget 'lock-up' crunching the numbers before the embargo was lifted at 2pm.
We're disappointed that Finance Minister Bill English has failed to commit to giving New Zealanders meaningful tax relief.
Points for getting the books back into black, but deductions for not addressing the long term fiscal issues facing New Zealand.”\
While there’s a little bit of fat trimming here and there, overall its more of the same tax and spend. To fix our long term problems of an excessive tax burden, Bill English needed to wield an axe to superfluous spending. He’s failed to do so.
Compare this Government’s approach to Australia. Despite Australia’s dire fiscal outlook, its Government is reforming things such as the retirement age to make the public sector sustainable.
Over the next four years, the New Zealand Treasury forecast $7.6 billion in fiscal surpluses and this year, just $15.5 million is allocated to tax relief.
That represents $4,935 per household of over taxation. Instead of committing to giving that money back, the only tax cut in this budget is to cheque duty. That’s a tax cut of one dollar a year per New Zealander.
In answering a question from the florr during the lock-up, Mr English told journalists and analysts that he has the balance about right. We don’t agree. What’s needed is an early and clear commitment to a program of reducing tax and compliance costs.
No wonder John Key has hinted at tax cuts during the election campaign. This is a tax cut that benefits only the one per cent who still use cheques. What’s next, removing excise tax on fountain pens?