Budget 2014 – still more to be done

Finance Minister, Bill English, deserves congratulations for his determined focus on balancing the government’s books. It’s taken six years but he is just about there. Also the government has taken some positive initiatives for example extending free GP visits to under 13s – a very helpful step towards improving outcomes for New Zealand’s young people.

However there is still more to be done, regardless of which party controls the treasury benches, after September. In the Health area alone we need to measure the reduction in rheumatic fever cases to ensure that new policy programmes are being effective – particularly for low income households. We need to make faster progress on health initiatives such as extending bowel cancer testing, reducing inequality and taking steps to reduce obesity. We also need to do more to reduce tobacco consumption, drug and alcohol abuse.

On the debt levels in the budget:
1. The government budget surplus is not actually a surplus. At least not yet. It’s a small forecast surplus for next year – 2015-16 – that is 12 months after the election.
2. In fact the 2014-15 current year budget shows the government spending $73.1billion for the year. Its total income from all sources is $72.5billion. This is a deficit of approximately $600million. (p.A4 Dominion Post 16/5.2014)
3. In 2008, crown debt was $10 billion – now it is $60 billion. That’s just the government debt – not the total overseas debt owed by the nation. Our debt as a nation – NZ’s net international debt position – was $141.2 billion at March 31, 2014.

The government has also postponed auto-enrolment in kiwisaver worth up to $290 million. We will need to start re-investing in kiwisaver if we’re going to deepen NZ’s capital markets and reduce reliance on overseas funding. So overall the move towards budget surplus is a big achievement but it would be wrong to assume we can afford a big spend up after the election. We still have urgent social challenges to be addressed and kiwi households and businesses still have very high levels of debt – which means the government debt needs to be reduced further to give us a buffer if there is another oil shock or natural disaster. The challenge for 2014-17 will be keeping on a path to ongoing surpluses to pay down debt – while also investing to tackle urgent social challenges at the same time.

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