Govt surplus 'fictitious' says economist

By Moana Makapelu Lee

Economist Ganesh Nana is calling the Government's surplus 'fictitious' with large social deficits still in need of addressing.

This follows the government's announcement yesterday of a $5.5bil surplus from the past financial year.

"This surplus is one year” says Nana, “There's a lot of deficits to address whether it's social deficits, infrastructure deficits, you're talking transport, you're talking addressing climate change and you’re talking land use, water quality- the list is endless."

Figures released show Crown core expenses were up $2.4bil above budget 2018 forecasts whilst net debt was below 2022 targets.

Prime Minister Jacinda Ardern says, "We do have debt that we need to manage.  We need to prepare for a rainy day and the international economic environment is starting to look a bit cloudy.  We need to make sure we are meeting the needs going forward as well."

However Greens co-leader James Shaw has come out in criticism of the surplus.  In an interview with Radio NZ Shaw said, “What point is a five billion dollar surplus if you’ve still got people living in cars and garages, right?”

Ardern says "We're planning to pay off debt more slowly than the last government so we can invest in housing specifically."

However Nana says the government's budget responsibility rules must be relaxed.

"I don't see anything fiscally responsible in generating surplus and playing down fiscal debts when we've still got our children sleeping in cars."

National leader Simon Bridges is attributing the increase to the government's 'raid' on taxpayer pockets since the election and is calling on the government to freeze and reverse imposing taxes, such as petrol tax.

"The taxpayer is the one who's footing the bill for the healthy books.  This is a case of government having more and Kiwis paying for that by having less."

Nana says, "I would be really disappointed if tax cuts were on the agenda coming out of this.  As I say the surplus is a bit of a fictitious surplus.  It’s one year when there's so many other things to address.  The last thing the government should be doing is giving me a tax cut."

Meanwhile a recent report by IMF has revealed that New Zealand's fiscal outlook is positive, with forecasts for growth around 3% for the next two years while forecasts for global economic growth have shrunk by 0.2%.

Minister of Finance Grant Robertson says, “The IMF’s Fiscal Monitor used New Zealand as an example of good practice for fiscal management.”

“The IMF expects the New Zealand government’s financial position to remain better than peers including Australia, Canada, the UK, the US and the Euro area, while our debt will remain lower than these other advanced economies.”

Robertson says the government will continue to make important investments including significantly increased funding of health, education, housing, family support and infrastructure.