What will the government do with the surplus?

Treasury released its financial report for the year to July, and the news is very good for the government. With a surplus of $5.5 billion, it has already reached its 2022 debt target, three years early.

Wow. Fantastic news, guys. You go get ’em!

Of course, as we all know, this has little to do with the current government. The previous government, through prudent fiscal management, got the government books back into surplus, and this is a flow on effect from that.

I mean, if you are about to congratulate the current government on their economic management, do bear in mind that these reports were the ones that Jacinda confused with GDP.

But the question now is – what will the government do with $5.5 billion?

Stuff ?reports: quote:

For Robertson, the picture could almost be too good.

The oversized surplus, combined with rosy Treasury forecasts, will inevitably add pressure from all sides to loosen the purse strings.

How will the Government convince teachers and other public servants that they cannot afford more generous pay settlements? Will motorists believe the Government when it says it cannot offer any relief from record petrol prices? end quote.

There will be no relief on petrol prices. They have already made that clear. They are going to rush through legislation and then let the Commerce Commission take a year to produce a report on it. So, forget that idea.

As for the teachers – well, they have a very militant union. They can now rub the government’s nose in this and demand that their expectations are met. After all, there is enough money, isn’t there? quote:

The $5.5 billion surplus – the largest since 2008 – is a touch deceptive, because it includes a large amount of money which the Government plans to spend but has not yet been able to. This could suggest it is struggling to get its plans off the ground. end quote.

D’ya think? Like all the houses they were going to build. Like the 1 billion trees that were going to be planted. Those kinds of plans? quote:

Treasury revealed on Tuesday that the Government’s core revenue – the amount of tax we all pay – was $80.2 billion in the year to June 30.

That is 6 per cent more than a year ago, and hundreds of millions of dollars more than Treasury expected as recently as May. end quote.

It takes years of good management to get results like this. A 6% increase in the tax take is huge. Once again, it is the result of careful planning and management by the previous government. quote:

But things will not necessarily continue this way, which he [Robertson] understands better than most. Large spending plans, and a Budget which relies on continued strong growth for years to come, means keeping on target until 2022 is harder than today makes it appear.

On Tuesday, Robertson said that – despite the healthy books – if anything, the risks to Treasury’s forecasts for the future are to the downside.

With low business confidence and rising global trade tensions, he is right. end quote.

Not to mention a falling dollar, the destruction of a profitable industry, rocketing fuel costs which will push inflation up to new levels, and the Greens wanting to spend an extra $1 billion a year on a no sanctions welfare programme. $5.5 billion looks like small change in the face of all that.

Just watch. The Greens will be sticking their hands out for more money to be spent on reducing our minute carbon footprint as well.

It will be interesting to see what the Crown accounts look like in a year’s time. I doubt if it will be pretty. In the meantime, I’m sure Jacinda will have found more reasons to charter private jets and hire PR companies. After all, we can afford it, you know.