borrowing

Is public spending stuck in the vicelike grip of our quasi-Austerian economic policy?

Are we at a turning point in our politics? I don’t mean whether we have a new government. That is a matter for the voters; the polls say that either they are very volatile or that the polls are very unreliable – probably both. What I am interested in is whether we will have a new approach to the economy.

A softening of the housing market, falling dairy prices and potential weakening of the Chinese economy do not bode well for New Zealand

There were knowing smiles among economists when earlier this year John Key set the election date a couple of months early. He told us it was because there were various international gatherings that the prime minister had to attend. But it also seemed possible that economy growth would be weakening at the end of 2014.

The National-led government has delivered an “Optimist’s Budget” forecasting increased tax revenue, increased spending, and increased debt on its journey to a wafer-thin surplus by June 2015.

This was no “zero” budget. If all goes according to plan over the next three years, the Government sees its tax revenue increasing by nearly 23%, its spending rising by a little more than 7%, and its net debt growing more than 34% to generate a surplus of $197 million on a $75 billion budget in 2015.

John Key wants to cut taxes, maintain spending and not saddle future generations with debt. But no country can cut its revenue and increase expenditure at the same time, so conflicted Key faces a hard choice

So John Key's still playing it coy on 2010 and 2011's tax cuts and yet is promising to borrow a whopping $40 billion over the next three years. Amidst the Prime Minister's tentative appearance on Q+A yesterday morning were some interesting nuggets of information.