Broken promise budget promises little

It’s been well signalled that the soon to be announced budget will break one of National’s long standing ‘promises’ – that they will balance the books by now after years of deficits.

National have to cop some flak for that because it’s been a major campaign plank. But attention will soon turn to what they are actually offering this year. A bugger all change budget could be as damaging to their re-election chances as an old broken promise.

A Dominion Post editorial is scathing – Budgets and broken promises.

Nothing can disguise the fact that this Budget also brings a big broken promise. It won’t supply the Budget surplus that National has promised for so long.

Prime Minister John Key and Finance Minister Bill English have been busy downgrading the pledge that they boasted about for so long; now it’s an “artificial target” and apparently doesn’t mean much at all. Yes, it was an artificial target. But it was National’s artificial target.

And they are also pessimistic.

Right now the fiscal cupboard is bare and it might stay that way for some time. The danger then is that more National promises, both large and small, will have to be broken. And that might end up really damaging the John Key brand.

The pre-budget announcements have been, inevitably, embarrassingly thin.

Are they under-promising while planning to over-deliver?

That’s an old political PR tactic, but if the delivery is still paltry then ‘steady as she goes’ might become ‘steadfastly going nowhere’.

Is there nothing available to deliver?

As English says, the big problem is that low inflation is putting a huge brake on the Government’s tax revenues. The effective cut is billions of dollars and it is forecast to last for years.

This and the collapse of dairy prices mean the Budget surplus might not even arrive next year.

National may be fenced in by their prudence – something voters have rewarded them for so far but there’s a risk they will swing away from it, especially if targets aren’t met.

Presumably, the Budget measures on child poverty will be small and disappointing. This might not damage Key much by itself. After all, his supporters are probably not personally much affected by the problem.

But, if more and more promises are broken and there is a slowdown in growth, the Key formula will begin to fray.

The Key formula is already fraying around the edges, something that’s inevitable by the third term.

But if a broken promise budget promises little for the future then the National Government may start to unravel.

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3 Comments

  1. David

     /  11th May 2015

    It’s funny the media were saying a couple of months ago that no one really cared if the deficit was a few hundred million because it’s within the margin of error. To call it a broken promise will result in a bigger backlash against the media because let’s face it the economy is humming along quite nicely and it’s the trend that the public will focus on…rather than a decade of deficits that Labour left us with we have a 12 month delay to the surplus. Big deal.

    Reply
    • In the whole scheme of things a continuing small deficit for as year or two is not a big deal. But National have been making it a big deal for several years so have to cop some flak for not meeting their target.

      Reply
  2. Goldie

     /  11th May 2015

    If I was Bill English I would have some words with Treasury and Ministry for Primary Industries officials about why they so totally failed to anticipate the collapse in dairy prices.
    It has been a major failure of government officials to factor in uncertainty about the future dairy prices. People were aware that Chinese inventories were getting full, and that Europe was going to increase dairy exports, so a price correction was on the cards, and we only had to look across the Tasman to see what happened when the Chinese stopped buying so much of a product. The Situation and Outlook by Ministry for Primary Industries done in 2014 which predicted dairy prices is so far divorced from reality it is funny. Questions need to be asked of the competence of the officials advising Ministers English and Guy.

    Reply

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