You might think Bill English wanted to crow from the
rooftops about the surplus he is about to unveil in Thursday's
Budget, the first in six Budgets he will have delivered.
But the Finance Minister is cool about it. He certainly
doesn't want the surplus to be celebrated as finishing
something he started.
"Rather than the end of a process, we will say this is the
first of surpluses."
In fact last year was more of a test of whether the surplus
could be achieved in the 2014 - 15 year - the country was
coming out of a severe drought and the impact on the economy
was not clear.
The half-year opening of the Government's books last December
forecast the surplus to be a meagre $86 million, expanding in
the following years to $1.6 billion, $3.1 billion, then $5.6
Prime Minister John Key has confirmed the first surplus
hasn't shifted much from being "wafer-thin."
But Mr English said he was not hung up on the actual number.
Now people expected the surplus, this year's Budget would be
more about where he wanted to go with the surpluses.
"Economically, plus or minus $500 million doesn't matter," he
"This year it is about what do you do with the surpluses."
Returning to surplus has been a goal since Mr English
delivered his first budget in 2009 in the midst of the global
Back then he forecast deficits for nine years, and projected
the next decent surplus to be in 2018 - 19.
But the time he delivered the Budget in 2010, the surplus had
been brought forward to 2015 - 16.
It was just over three years ago, in January 2011, that the
Government indicated for the first time it would move the
goal posts to 2014 - 15, in a speech by Mr Key.
Several years ago, Mr English described the surplus target as
"a symbol of responsibility."
This week he said it had been an important focus for the
Government to get its finances under control "in a way that
is reassuring for the public who have had to deal with a lot
of uncertainty themselves."
"Looking ahead it is becoming less important because the
focus has shifted to looking ahead to growth and opportunity
from recession and deficit."
Even the Budget of Thursday will only be a forecast of a
surplus in the coming financial year. Whether it is actually
achieved won't be known until September 2015. That is when
the final accounts for the 2014 - 15 year will be released by
Mr English and Mr Key have always said they were not
hell-bent on keeping a forecast surplus in 2014 -15 at any
But that is what they were accused of in December 2012 when
the Government raised the petrol excise duty by 3c a litre
for three years in order to keep a forecast surplus in the
half-yearly opening of the books, albeit $66m one compared to
the Budge forecast of $197 million.
On the question of debt, Mr English says the Budget will set
out a plan to get debt down but he will be "less fixated on a
shorter term number."
"The Government accounts move around a lot so we won't
continue to focus on specific numbers because you can end up
driving the system around things that aren't that important
in the long run."
The Government has tightly controlled Government expenditure
this year and will allocate just under $1 billion in extra
Mr English said the disciplines the Government had set in
order to get to surplus had turned out to be sustainable and
would help deliver debt reduction, surpluses and more choice.
"That is why we are not going to talk about it as the end of
something because what we have created is a new normal - an
expectation that while we are being pretty tight with
spending, we are going to see lower crime rates, more kids
getting through school, more money for health."
It was more a matter of saying this would be the first of any
number of small surpluses: "here is the framework we have
developed and we are going to keep applying that and here is
the kind of thing you should expect to see."
English on the Aussie budget
Finance Minister Bill English doesn't believe the Australian
economy is as bad as the doomsayers say it is.
"You've got to remember the Aussie mindset," he told a
National Party audience last week. "They've been winners for
30 years. It's like they have beaten the All Blacks every
year for 30 years and suddenly they start drawing and losing.
"They are used to everything going really well so they tend
to be more negative than they should be."
Treasurer Joe Hockey will present his first Budget tomorrow
since the Coalition was elected last September.
A pre-election opening of the books in August forecast a
A$30.1 billion cash deficit in the current year and a total
of A$54.6 billion in the cash deficit over four years.
But a post-election update of the books in December forecast
as A$47 billion cash deficit in the current year - A$68
billion more - and A$123 billion over four year. Much of it
is put down to lower growth forecasts and consequentially
less revenue, but there are heated disputes over how much can
be atrributed to old Labour Government management or new
Australian commentators expect the budget to create a
temporary deficit levy on high-income earner, increase petrol
excise, introduced some new health care charges and increase
the pension age to 70 over time.
Mr English said he had concerns for some New Zealand
businesses hit by the downturn in Australia.
But he backed the Australians to get on top of it.
"Overall I think we should have a bit of confidence in the
Aussie's confidence. You can back them to sort it out."
- Audrey Young, NZ Herald