Published in Insights, The New Zealand Initiative’s newsletter, 22 May 2015
Budget 2015 was delivered yesterday, and my colleagues below take a look at this mixed bag of good and questionable decisions.
But what about the overall direction of the government? The Labour opposition made much noise about the missed surplus. However, that is a sideshow. A few hundred million in deficit or surplus is a rounding error in the grand scheme of things. We should rather be looking at where National intends to take the country in the long run.
Though it is welcome to see core Crown expenses fall from 30.5 to 29.2 percent of GDP by 2019, it is concerning that for economic growth the trend is also downwards: from 3.3 to just 2.0 percent growth.
Budget 2015 shows there is work to do to make New Zealand more productive. Unfortunately, it did not give us any suggestions on how the government would want to achieve this. If the forecasts are right, the end of three terms of a National government will have brought overall government spending back down to where it was at the start of Labour’s second term under Helen Clark.
Is this the best that economic liberals can hope for?