Finance Minister Grant Robertson managed to put a bold face on his fiscal management last week when he presented the latest set of Crown accounts, saying they “are continuing to reflect the strong position New Zealand is in to manage the challenging global environment”.
Tax revenue in the nine months to March was $2.7 bn above forecast at $78.6bn, due to better-than-expected corporate profits and a strong jobs market. This was partly offset by lower GST returns.
Core Crown expenses were close to forecast at $92.6bn.
The operating balance before gains and losses (OBEGAL) deficit was $8.1bn, $4.1bn below that forecast in December’s Half Year Economic and Fiscal Update.
Robertson commented approvingly:
“This result shows the strong position New Zealand finds itself in, despite the uncertainty and volatility of the Ukraine war, the pandemic and ongoing supply chain disruptions in critical trading hubs like China. It is further evidence that our strong health response has been the right one for the economy”.
Robertson concedes there are significant challenges for families and business right now.
“But we face those challenges with record low unemployment, good growth levels, lower debt than most and the Government books in a strong position”.
Robertson’s sunny optimism cannot hide the dark clouds on the horizon, nor indeed the moaning at the bar whipped up by the Opposition over the cost-of-living “crisis”.
As the Newshub Reid Research poll last week showed, 68% of NZ’s those sampled are looking for a tax cut in the Budget.
The issue has become so intense, some of NZ’s most alert pundits reckon Robertson’s credibility as fiscal manager hangs on it. And Labour, already behind National in public polls, could find itself sliding further.
The problem for the Ardern government is that elections in the MMP era are won, and lost, in the middle ground — and these are the electors who are the hardest hit by surging inflation. It is running at its highest rate in 31 years, something so unfamiliar to many New Zealanders they cannot believe the price tags on goods at the supermarket.
They tend to become quite savage when Robertson tells them “2022 continues to be a challenging year for many New Zealanders facing the impact of global inflation” and then adds “but our fiscal position is strong”.
Robertson will be adding salt to the wounds when he announces a big spend-up on infrastructure and climate change measures in the Budget.
When the AA warns that petrol might reach $4 a litre and the Reserve Bank signals it will continue to raise interest rates, it seems Robertson’s assessment the current surge in prices will be short term will echo hollowly in the ears of New Zealanders.
So those Labour backbenchers facing foreshortened political careers as the polls show the Ardern government’s popularity fading sharply will be praying for Robertson to work a financial miracle in the Budget.
Sadly, Point of Order thinks miracles may be out of reach for the Finance Minister – despite the competence he has shown.
Point of Order 