Key Dampens Surplus Expectations

Posted: January 28, 2012 in Uncategorized

Here is something that not only does not surprise me, but I actually said would happen before the election. The Government’s ridiculously optimistic plans to return the books to surplus by 2014/15 have received a dampening by the Prime Minister in his latest ‘state of the nation’ speech. While at this stage National still expects us to return to surplus by 2014/15, their projections have been slashed by $1 billion. The surplus is now expected to be around $500 million and the European crisis is to blame.

On November 4, I issued a press release on the deficit ( http://www.solopassion.com/node/8709 ) saying that we will most certainly not return to surplus by the time of the Government’s target. I said, “The Labour and National parties both lack rely on notoriously optimistic Treasury figures to justify maintaining their unsustainable levels of spending while claiming we will be back to surplus in three years. By the time three years is up, whoever is in power, the Government will have another excuse for failing to rein in the deficit and voters will allow themselves to be duped again.” This is exactly what is now happenning. The Government, instead of making the radical reforms necessary to get the book back in shape, it continuing with business as usual and using foreign excuses to justify their failure to manage their books properly. I confidently predict again, that as we get closer to the target date, surplus projections will become more pessimistic, to the point of an expectation of further deficits.

The problem is that our Government still believes that the state can sustain its current functions and that with a bit of careful management we can continue to do what we have always done. I completely disagree. Government as we have always dfone it is completely unsustainable and we need to totally reform the way it works. The role of the state must change from one of taxer, regulator and welfarist to a state that protects the liberty of the individual and nothing more. In November I proposed that the only way to return to budget surplus and kickstart the economy would be through cuts in taxation,much bigger cuts in spending and a total reassessment of what it is the Government does. It would seem that the National government is determined to prove me right.

Told you so doesn’t feel so great when the future of the country is at stake.

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