Pointers to a bleak but not black Budget

Those who like sniffing out clues to what will be in the Budget would have learned nothing significant from The Boss yesterday, when he talked to Business New Zealand in Wellington.

Essentially, he destroyed any illusions about it being a generous budget that might have survived the release of the crown accounts for the nine months to March.

The accounts showed there ain’t much scope for extra spending without borrowing, and John Key and Bill English are reluctant borrowers.

On the other hand, Key (the previous day) was trying to disabuse us of the idea it will be black budget.

“I wouldn’t describe it as black, in fact we are spending a lot of extra money on health and education, but beyond that there is not a lot more to go around,” said Key.

Finance Minister Bill English said he would be scaling back some of the spending promises made by Labour, but there would still be increases.


The Herald today reports on Key’s address to the business people yesterday (and picked up a malapropism):

But he said it would not be a “doomsay [sic] Budget”.

He said the line by line review of Government expenditure had been “extremely productive”.

There was plenty of scope for weeding out lunatic projects spawned under the Clark Gang’s nine years in government,

As an example of cost-cutting, Finance Minister Bill English told Parliament that he had saved $1 million “canning a programme to teach kids how to pat dogs”.

But while the Government will be spending more in the Budget than ever before, Key told Business NZ, the rate of increase in spending would not be kept up.

“That will require ending some Government programmes and reshaping others.”

Like any family with a big mortgage, the Government would have to prioritise its funds and “resist some luxuries”.

Oh, and further tax cuts?

Prospects are bleak (as has been hinted previously).

Mr Key also sent his own unmistakable signal to the business audience that tax cuts promised for 2010 and 2011 would be delayed. The Budget would contain some “responsible” decisions.

“These will include delaying some steps in our economic plan that we would rather have made sooner,” he said.

When asked if that pointed to a delay of the tax cuts, he said: “I would be opposed to the cancellation of tax cuts.”

There was an optimistic edge to all this: Key said the recession could be a “springboard for better times ahead” and talked of New Zealand being capable of leap-frogging countries we compete with economically “so that New Zealanders are much better off on a relative basis.”

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