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Bill English delivering Budget 2009 - Source: ONE News -
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Right so that's the Budget done and dusted.
The international ratings agencies are happy , the long term debt track eventually goes down, the tax cuts are gone, government spending has been pruned and superannuation returns from a brief period of consensus to being the political football it has been since Robert Muldoon cancelled Labour's 37 week-old compulsory scheme in December 1975.
The debate over both the economic wisdom and the inter-generational fairness of suspending contributions to the Super Fund for a decade will endure, but overall Bill English's first Budget went some way towards balancing the books without repeating the slash and burn exercises of the 1980s and 1990s.
Now what? That's the question which hangs in the cool air following the English Budget.
English has put the government on a Jenny Craig diet by restricting his next two Budgets to $1.1 billion in new spending - pretty tight when you consider new spending in this Budget totalled $1.4 billion.
He's also protected the revenue base by cancelling the tax cuts (I don't buy the argument they have been "deferred" as there is no time frame for their return nor any guarantee they'll be back in the same form).
But how do we begin to actually grow the revenue stream? What is there in the Budget to actually begin to make us richer?
Very little that I can see.
The argument that Kiwis are being asked to swallow is that tax cuts are luxuries we can't afford in the depth of a recession. Fair enough. But National has for years claimed personal tax reductions are critical to economic growth, not merely nice to have for personal gain.
Now their big economic and political idea is gone.
In fact, it is interesting to note that in the Budget, National kept Labour's ideas (Working for Families, interest-free student loans) and cancelled their own idea of tax cuts, which doesn't say much about the collective imagination of the National Party.
Indeed another of its big economic ideas was to ensure up to 40% of the Super Fund was directed into New Zealand businesses. That idea, if not axed, does seem to have gone on the back burner.
So what are we left with?
Significant investment in broadband - that could be helpful. The home insulation fund - that will make us a little warmer but not any richer. There are some moves to invest in science, research and development although they are fairly timid.
There is a review underway into the Overseas Investment Act to see whether we are missing out on injections of offshore capital, although political reality will temper this, given the issue of foreigners buying local assets borders on the xenophobic in the New Zealand Parliament, especially among the Green and Maori parties.
There is also an independent tax review underway.
Now, if tax cuts are off the agenda perhaps they could consider a capital gains tax on a second property, thereby shifting the investment incentives away from the unproductive housing market and towards local businesses and the sharemarket, thereby actually creating some wealth?
Unfortunately it's extremely difficult to imagine the National Party having the courage to do that.
Bill English's first Budget was a book balancing exercise and he
passed that test (as much as you can when you're still running a
decade of deficits). Now it gets interesting - or at least it
should. We've seen the numbers now we need to see the ideas.
Guyon interviews Bill English on Q+A: Read the transcript or
watch the interview
Got an opinion on something Guyon has discussed? Share your
views on the message board below.
Add a Comment:
Post new commentGeoff Keey said on 2009-08-14 @ 01:47 NZDT: Report abusive post
Guyon, I was surprised to see you citing the Government's climate change cost estimates so uncritically given the extent to which they have been discredited.
stephen6565 said on 2009-08-13 @ 22:15 NZDT: Report abusive post
Another very poor article. You are part of the fourth estate and should be asking the hard questions of the govt. Making the govt accountable is not just the oppositions job. This whole article is just rubbish 'feelings' centred around your personal political views. Stick to policy and 'news' items.
geekypolitics said on 2009-08-11 @ 19:34 NZDT: Report abusive post
Mr. Espiner has some good advice for Labour especially on the environment, but the idea that Goff should "cuddle" up to Key is appalling. It is always difficult for the opposition to take a stance on matters that are of an international nature, as the reputation of the country as a united entity is at stake. Democrats in the U.S. had the same problem with regards to the Iraq War. I'd hate to see Labour make the same mistake in the name of "solidarity behind the troops."
Andrew Nichols said on 2009-08-11 @ 14:17 NZDT: Report abusive post
"Polls in Britain showed, counter-intuitively, that support for their troop deployment increased even as casualties mounted. " You're flat wrong! Current polling in the UKs major dailies actually shows majority and growing option to Britains involvement in Obams purposeless war. Not that that's ever bothered the govt there, who in time honoured fashion enjoy perpetuating "Britains post WW2 role as the Greeks to the US Empire" (Harold McMillan 1943)
Kereama said on 2009-08-11 @ 13:39 NZDT: Report abusive post
Of course Labour need to find their direction! They lost the election and they lost touch with grassroots NZ - National did too once, and it took them years to get back on track - but they did. The point is, the "road to nowhere" isn't permanent (unless you're Winston Peters... let's hope anyway). While it may be the opposition's role to critique the Government, the media has an obligation to do so also. Let the opposition "find" themselves and focus instead on the ones that count.