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Source: ONE News -
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If we accept Thursday's Budget had one main goal, to maintain New Zealand's international credit ratings agencies, then Bill English and John Key deserve a pat on the back.
The fact that Standard and Poor's not only affirmed New Zealand's rating at AA+ but put it back to a stable outlook from negative is a huge coup that will help keep interest rates down, not just for the government but also households.
But of course the effort to appease the agencies has come at a cost: the biggest in my mind being the decision to defer payments to the New Zealand Superannuation for 10 years.
This was the big surprise of the Budget.
The tax cuts deferral was well telegraphed and there is little argument about the need to put those on hold.
The Super Fund, aka the Cullen Fund, deferral is a different story and a risk for the government.
I think most commentators were willing to accept that payments to the fund could be put off for a couple of years to help get the country through a rough patch.
It's a compelling argument that one should not be borrowing money to invest in risky share markets at the moment, even if the Super Fund has started making money again in the last few months.
Not all of course agree, some say now is actually the right time to invest as there are a lot of bargains to be had...
Delaying payments for 10 years is a big call
Remember, this fund was set up to help pay for a spike in the retirement of baby boomers in about 25 years time.
But under this plan announced by Bill English the Super Fund will be about $20 billion short by 2020.
That's $20 billion that presumably will have to be paid by a younger generation of taxpayers. That's going to be hard because we have an ageing population.
So, not surprisingly, commentators are now saying that to meet the future costs of super, without a fully paid Cullen Fund, there will have to be either a cut in superannuation levels, a lift in the retirement age, or increased taxes in future.
Bill English is not willing to enter into this debate, and of course has stressed there will be no change to current superannuation entitlements.
No, he seems to be banking on growing the economy faster over the next 10 years through things like increased productivity, with the aim of having a bigger economic pie from which to pay out super entitlements in future.
However that's a big ask. We've struggled with productivity gains over the last 15 years and no one yet seems to have the answer on that score.
Let's hope Bill English can crack the nut.
But there are risks to his plan, in particular the rate of economic recovery in future.
While Bill English may have been a little more conservative with his forecasts going forward than say Australia or the UK, Moodys rating agencies told me that there are still major risks to our growth forecasts from the weak world economy.
And, did the Budget offer any specific policies to really drive up growth and innovation through exports for example?
Well, there is spending for infrastructure, that's important. The farming sector gets some help too.
But, overall, financial commentators like Rod Oram were disappointed with the lack of economic vision in the Budget.
Others felt National had also missed an opportunity to be more aggressive in using the political capital it has from the recession to make some big structural changes to the economy.
Next year's Budget, however, might well be a more visionary and bold Budget.
Particularly as a tax working group currently looking at the structure of New Zealand's tax system will have reported back by then.
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