Grant Robertson rejects ‘spending spree’

Yesterday the Government announced a much larger than expected surplus of $5.5 billion ($2.4 billion more than forecast)- see Government announces strong surplus.

James Shaw called on a big spend up:

Green Party Co-Leader James Shaw is calling on the Government to use the money from its “extremely healthy” books to invest in New Zealand’s public sector.

“What good is a surplus if you have people living in cars or garages – that makes no sense,” he told the Herald.

“Frankly, a surplus is inefficient if you don’t use it.”

Shaw said the Government should be using that money to invest in New Zealand’s “massive infrastructure deficit”.

“New Zealand’s debt levels are well within what the international markets would deem to be prudent, interest rates are historically low and we have a massive infrastructure deficit; to me, that just all points in the direction of using that surplus for infrastructure investment in particular.”

That investment, he said, should come from both the surplus and the 2.1 per cent headroom the Government has before it reaches its 30 per cent spending limit – a combined total of $11.5 billion.

https://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=12139642

But Minister of Finance Grant Robertson is trying to dampen down spending expectations.

Is this a one off result? Surely Treasury has adjusted it’s budget forecasts after this unexpected result.

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41 Comments

  1. PartisanZ

     /  October 10, 2018

    We could call it a “spend up” … or maybe “social investment”?

    ‘Invest to close the wellbeing deficits’ – Newsroom

    “Bernard Hickey argues the Government should use its strong balance sheet revealed today to borrow and invest just like any other over-crowded household with a high income, very little debt and very friendly bankers would do.

    Just imagine what you would do if you looked closely at your household finances and discovered you actually were wealthier than you thought, and could get even wealthier by borrowing and investing in your own future.

    Would you manage your household differently?”

    https://www.newsroom.co.nz/2018/10/09/269769/invest-to-close-the-wellbeing-deficits

    Reply
    • Pink David

       /  October 10, 2018

      “social investment”

      Does this just mean spending with no tangible return?

      Reply
      • PartisanZ

         /  October 10, 2018

        A tangible return that may be measured in more than just dollars Pink David …

        And Glory Be … We have a government prepared to do that too!!!

        Reply
        • Pink David

           /  October 10, 2018

          “A tangible return that may be measured in more than just dollars Pink David …”

          The use of the word investment to describe this is rather misleading. Spending for the feels is just spending, not investment.

          Reply
          • PartisanZ

             /  October 10, 2018

            Come now … The word investment has several ‘meanings’ including in a kind of modern-day ‘stakeholder’ sense …

            “There’s been a significant investment of time and energy in order to make the project a success.”

            https://dictionary.cambridge.org/dictionary/english/investment

            Social investment can be read several ways. “Spend up” is a Rightie duck in today’s shooting gallery …

            Reply
      • PartisanZ

         /  October 10, 2018

        To National I think it meant, “Reduced spending with no tangential or ancillary return other than dollars” …

        Human beings as “improvable” units of production and consumption …

        Reply
  2. Patzcuaro

     /  October 10, 2018

    Hole?

    Reply
    • robertguyton

       /  October 10, 2018

      Head like a.

      Reply
      • robertguyton

         /  October 10, 2018

        Oh, Steven; Steven, Steven, Steven…is that trouser-smoke we’re all smelling?

        Reply
    • Corky

       /  October 10, 2018

      Hole? The spending hasn’t started yet. Be thankful James Shaw doesn’t hold the fiance portfolio.

      Reply
      • PartisanZ

         /  October 10, 2018

        A bouquet for Robertson …

        Reply
        • Corky

           /  October 10, 2018

          I don’t think he’s a fool..neither does business. However, he will eventually become a victim of his own parties policies. That’s unfair in some regards.

          Reply
          • PartisanZ

             /  October 10, 2018

            Agree … clearly business has some “confidence” in him … and, by now, as with Cullen in Fifth Labour, some perhaps considerable ‘influence’ over him … ?

            Reply
      • Blazer

         /  October 10, 2018

        Shaw is married Corky.
        He is not interested in a fiance …role.

        Reply
        • Corky

           /  October 10, 2018

          What has that got to do with making an educated guess and moving on?

          Reply
          • Blazer

             /  October 10, 2018

            you may well ask…’ Be thankful James Shaw doesn’t hold the fiance portfolio.’

            Reply
            • Corky

               /  October 10, 2018

              This will help you to move on. 👍👍👍
              However, Parti had the better wit.👍👍👍👌👌

    • PDB

       /  October 10, 2018

      Reply
      • robertguyton

         /  October 10, 2018

        So, PDB, Steven’s hole is…pending…?
        What a foolish call his was; “Oh, but I meant … one day…soonish…maybe….probly…. pfffffffffft

        Reply
        • PDB

           /  October 10, 2018

          Like the hole in between your ears the fiscal hole still exists – the Coalition govt should be grateful they can temporarily hide it due to the booming economy they have inherited from National. Now on their own economically it can only end in tears for them (and most likely the taxpayer).

          Reply
          • robertguyton

             /  October 10, 2018

            A much larger than expected surplus of $5.5 billion ($2.4 billion more than forecast) and PDB’s crying doom and gloom! This is entertainment at its best!

            Reply
  3. Blazer

     /  October 10, 2018

    I agree with Shaw spend up large,borrow more and spend it on infrastructure.
    Pile up debt,inflation will take care of it,as world wide debt is unpayable anyway.

    Would be political suicide of course.

    Reply
  4. Zedd

     /  October 10, 2018

    $5.5bln to spend on ‘social investment’ that was almost totally ignored for 9 loooong years.. 🙂

    I hear some Tories saying ‘We could have had those Tax-cuts’ that Natl campaigned on !

    Reply
    • PartisanZ

       /  October 10, 2018

      Well … Zedd … credit where credit’s due … National came up with the ‘corporatized’ name “Social Investment” – a business elite-pleasing strategy to reduce government spending on welfare through targeted intervention based on meta-data … and they … talked about it a bit … and I guess maybe offered tax cuts on the basis of assumed though entirely theoretical, untested savings?

      Reminds me of a four lane motorway to Whangarei I’ve got to sell ya!

      Reply
  5. Gerrit

     /  October 10, 2018

    Remember that $5.5 billion dollars did not appear out of thin air or was achieved by any significant and ongoing savings made by the state.

    It was derived from taxation in the tradeable sector mostly through taxation bracket creep as wages go higher. “That was largely due to a 5.5 percent increase in the tax take to $30.41 billion ”

    It was derived from greater GST take on higher import costs due to the falling dollar. As well as GST on new housing.

    It was derived from a delay in treaty settlements and that deferred cashflow is retained as surplus.

    Worth a read

    https://www.nbr.co.nz/article/government-turns-out-unexpected-operating-surplus-five-months-november-b-211910

    It is certainly a good surplus to have but there are warnings especially when the GST content paid in is claimed back when imported produce is sold.

    Biggest concern must be the taxation bracket creep as wages go higher. Something that needs to be addressed from the taxation working group.

    Reply
  6. PDB

     /  October 10, 2018

    I note Ardern in her stuff-co.nz interview today stressed this was a ‘one-off’ whilst Robertson said exactly the same thing yesterday. It would be a ‘one-off’ for the coalition govt considering it was largely created by the outgoing National govt. The next few years will be interesting in terms of how much surplus this govt can create on their own & by what means – taxing us to death appears to be their only answer.

    Reply
    • robertguyton

       /  October 10, 2018

      Note that Jacinda didn’t say that the one off “was largely created by the outgoing National govt.”
      The next few many years will be interesting, PDB, indeed! ‘Cause this year is interesting (and owned by…Jacinda!)

      Reply
      • PDB

         /  October 10, 2018

        She wouldn’t of course admit to that Robert – lying has become such second nature to her now it probably never even crossed her mind to tell the truth.

        The fact both her and Robertson are at pains to tell us this is a ‘one-off’ suggests not even they are expecting much in future years as all the working groups report back and policies are implemented that will definitely stall the economy. No doubt when that occurs you will blame everybody else but this govt.

        Reply
        • robertguyton

           /  October 10, 2018

          PDB, though I enjoy your contrariness and dogged support for your team, I find your repeated casting of Jacinda as a liar is low and nasty. You can do better than that. You must remember how you felt when Key was cast similarly and how you knew those calling him that were idiots. You are now one of those, PDB. Come on man, lift your standards; “lying has become such second nature to her now ” – that sort of stuff is…feeble.

          Reply
          • PDB

             /  October 10, 2018

            Attack the messenger not the message then Robert? When someone such as Ardern says to the whole country during an election campaign that she believes it is possible to not lie and then does so she only has herself to blame for either her dishonesty or political naivety.

            Lying can take many forms, straight out lies, lying by omission etc. Some people lie with good intention i.e. to save someone embarrassment or hurt. Considering this ‘lift your standards’ comes from yourself – a troll with very little of substance to add to any debate – I suggest you take your own advice first and then you might have at least 1% credibility when talking about the postings of others.

            Reply
  7. Gerrit

     /  October 10, 2018

    The more one reads up about the surplus the more smoke and mirrors hide the reality.

    The recent borrowing of $2.9B by HNZ is not on the books.

    https://www.newsroom.co.nz/2018/08/30/216208/treasury-slams-govt-borrowing

    And from a comment here

    https://www.interest.co.nz/business/96259/westpac-economist-michael-gordon-argues-capacity-constraints-are-restricting#comments

    “A revaluation of the national state highway network has improved the Governments books, and turned $2.4 billion deficit into a $5.5 billion surplus.

    Against a $2.2 billion spend on the network, with the majority on State Highway 1 due to the Kaikoura Earthquakes, the revaluation appears to have taken a replacement based approach, as opposed to a value based approach which has resulted in a $2.4 billion uplift, as well as an average preliminary and general assumption rate of 34% equating to an $4 billion uplift.

    It does not seem that this valuation approach has been widely used in many other countries, but with some creative accounting the Government has turned a certain deficit into an astounding surplus. This will certainly be surprising to many, especially when considering the major increase in value is due to a fairly unusual approach.”.

    Reply
  8. Gerrit

     /  October 10, 2018

    From the newsroom link

    The Pre-Budget Economic and Fiscal Update or PBEFU shows off-balance sheet borrowing increasing from 0.5 percent of GDP now to 2.2 percent in 2022 – equating to roughly $6 billion, depending on the size of New Zealand’s economy.

    Reply
  9. Alan Wilkinson

     /  October 10, 2018

    Labour cooking the books then? Time will tell of course.

    Reply

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