Govt celebrates signs of life in economy
Wed, 10 Oct 2012 6:04p.m.
By Duncan Garner
The Government's managed to halve its deficit from around $18 billion to just over $9 billion in the year to June.
That’s why John Key was finally drinking to signs of life in the New Zealand economy today, even if it was only a sip at 11am.
The Government's accounts to June this year show the days of moaning and groaning may be over. And growth – no matter how small – is something Mr Key’s clinging to.
“We're heading in the right direction,” he says.
The deficit has been halved to $9.2 billion – that's still above forecast, but down from the record $18.4 billion last year.
KiwiRail's $1.4 billion write off in value hasn't helped. In fact the deficit would actually be lower than forecast if the KiwiRail train wreck hadn’t slightly derailed the Government's books.
“We're not in bad shape relative to other countries but it's still tough on people who don't have a job,” says Mr Key.
Labour leader David Shearer says most New Zealanders are not in a position to celebrate.
“It's going to be cold comfort for most New Zealanders – they're working harder than ever before, we've got job losses and manufacturing in crisis,” he says.
Despite all that, there are some small signs of life in the economy.
Tax revenue is up $3.5 billion overall, including a $2 billion increase in the corporate tax take as business profits rise. PAYE is up a bit and GST is up almost $1 billion, meanwhile Government spending has dropped $1.4 billion.
“Our economy is growing, people are starting to pay more tax,” says Mr Key.
But economists say the coming years don't look that rosy.
“Unfortunately the outlook for further years doesn't look bright given our economic growth,” says BERL economist Ganesh Nana. “Forecasts have been revised down.”
That leaves one crucial question: what are the chances of the Government posting a surplus in 2014/15?
“Pretty slim, bluntly,” says Mr Nana, “unless the Government starts cutting expenditure yet again.”
Mr Key says outside forces may stop his Government reaching surplus.
“We've never been able to commit 100 percent, it's always been a target,” he says. “We are always subject to international conditions.”
The Government still hopes to achieve a surplus in 2014/15 – it's become a political goal – although Mr Key is far less bullish about getting there than he used to be.
Certainly today's numbers leave it on track, but only just. And National will have to deliver two tight budgets in 2013 and 2014 if it's to get there.
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22/02/2013 2:42:24 p.m.
I wonder how much better off the economy would be if National hadn't given the tax cuts to the rich and corporate NZ and what the tax take would be compared to what we see here?
26/10/2012 3:20:11 p.m.
printing money is irrelevant as the private banks who own 97 percent of all money use electronic banking systems and just create money out of thin air. They create debt and this debt fuels the economy, so until we regulate our largely private banking system then inequality will grow with ongoing boom and bust cycles. Accountability and a democratic banking system are the only way we will see an improvement in our society.
14/10/2012 7:18:13 p.m.
Just Me wrote:
In the mid-80s there was a song for Star Trek. Part of wording was 'It's Life Jim but not as we know it. Not as we know it. Not as we know it..."
So my re-wording of Star Trekking Across the Universe is now "It's life(life in economy - yeah right)John(Key)but not as we know it.Not as we know it.Not as we know it.."
Now John Key recently talked about life on Planet Key with its lack of toilets etc.
So life of a so-called 'signs of life on the economy' shows he is still in Lala-land Planet Key.
The problem is someone misplaced the padlock and so there is a Key with no lock to put that Key into. It kind of shows how worthless one key and no padlock can be on a planet when one is really desparate for the toilet due to all the crap that is flying about.
11/10/2012 8:41:37 a.m.
Signs of life? For who?
11/10/2012 7:06:17 a.m.
Then again Nana is a Nana who recommeds NZ print money along with other loons like the Greens/Labour/NZ First. Printing money has neve worked in the past and it wont work now for NZ.The increased tax tax shows real NZ growth and real improvements in NZ. It doesn't mean things are easy, but they are getting better. Better business will turn around to more jobs, it always does.Compare it to Labour who had roughly doubled government spending each 4 years and we would be up to deficits of $40-80 billion under Labour, and by pringint money they would lower the NZ $ 25% so the amount of NZ money to come up with to repay the foreign debt would 1/3 higher, or call it $50-100 billion NZ a year! This way they could funnel more NZ profits overseas in contradiction to their moaning about NZ profits heading overseas.We should remove much of Labours RMA and get more mid/low cost housing built in Auckland to ease the housing prices driven higher from the housing shortage.
10/10/2012 7:05:00 p.m.
Does that mean Marijuana can be tested as a legal high?
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