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Government spending - Source: ONE News -
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Some economists are sceptical of Prime Minister John Key's continued commitment to getting the country back to surplus in two years.
Key said yesterday that, barring a major meltdown in Europe, the Government is on track to post a surplus of around $300-500 million in 2014-15.
His Government had estimated a 2014/15 surplus of $1.5 billion in the pre-election update last year.
Today, the Government accounts for the five months to the end of November 2011 showed a deficit of $4.48 billion, a blowout of $252 million more than expected before the election.
Leading economist Shamubeel Eaqub, of economic forecasters NZIER, told TVNZ's Breakfast this morning that he thinks the timing of getting back to surplus is an unrealistic goal.
"We think revenue is going to be much harder to come by and they had very optimistic expectations for spending cuts," he said.
"We think it will be very hard for the Government to get back to surplus by 2015."
Eaqub said the cuts made to spending so far, like in the public sector, have been "incremental" and it is very hard to make large spending cuts when the economy is not growing.
New Zealand's most recent economic growth figure - Gross Domestic Product for the September quarter - was a small 0.8%.
Eaqub believes the 2014-15 goal, which underpinned National's election campaign promises, is an arbitrary date that does not matter economically.
"I don't think there is anything magical about 2015," he told Breakfast today. "Really the main point is, we need to have some sort of fiscal consolidation because we don't want to be outed in the market as (having) bad behaviour with government borrowing."
He said he thought the 2014-15 dates might be important to the Government due to another election falling within that period and he does not expect the international credit rating agencies to "punish" the country with another downgrade if it is not achieved.
Eaqub is calling on the Government for a "transparent and cohesive plan" to cut spending and get the books back to black within a specified, but more realistic, timeframe.
"That's the real, clear message here. It's not so much that we will never get there (back to surplus) but because of other events overseas, because things have been weaker than we had previously expected, it's absolutely fine, I think, if it's delayed by a year or two."
