We're going to start this morning with the Half Year Economic and Fiscal Update, which was actually the Three-quarter Year Economic and Fiscal Update. It delivered news we all expected, and that is that we're getting there as a country. It's just taking longer than we thought.
Treasury's half-year update, published on Tuesday, predicted a return to surplus in 2029/30, a year later than it forecasted in May. Finance Minister Nicola Willis said she'd continue to aim for 2028/29 and said we're on target to return the books to surplus faster than they will in Australia, the UK, Canada, and many other advanced economies, while maintaining a prudent debt position.
She's doubled down on what she calls her disciplined plan for returning the books to surplus, and says she's not willing to implement more brutal spending cuts, as the Taxpayers' Union have been advocating for, warning that their prescription would deliver human misery and hurt frontline public services and depress already weak demand in a recovering economy. She points out that the Taxpayer Union proposed, among other things, scrapping all Working for Families tax credits, reducing the average weekly income of the recipients by about $180. She said beneficiaries and low-income families would be at the brunt of any change like that, delivering a level of human misery she was not prepared to tolerate. She said of Labour's criticism, that their approach to spending is reckless and would further delay a return to surplus.
She said that the Government had delivered about $11 billion a year in savings during its term. Without this disciplined approach, she says the year's deficit would be $25 billion, and debt would be on track to blow out to 59% of GDP. So, according to Finance Minister Willis, she and her government are on track, and that being castigated by the Taxpayers' Union for being too soft, too wimpy, and being criticized by Labour for being too harsh, means she's charting the right course.
It is a fine balance she has to strike. You, me, everybody can see where she can make cuts. The winter energy payment, making it a needs-based payment, making a number of allowances needs-based, the fees free, that sort of thing. There's a lot of low-hanging fruit you could pluck off and save a few cents here and a few cents there. What a lot of households have done over the past few years. But she is bound by her agreements with coalition partners. There are some things she cannot touch. She's working in an MMP environment. There are plenty of things I'm sure she'd love to do, things that Ruth Richardson could do, but even allowing for the human misery factor, there are coalition partners she has to placate, and the Government wants to get re-elected.
It is utterly pointless steering the right course, but only for three years. It is utterly pointless saving a few billion here, only for it to be squandered next time round. So what do you suggest she does? I'm sure she gets plenty of reckons from all sorts of people – the most recent and the most high profile was former Finance Minister Ruth Richardson, who really should pipe down. I'm glad that debate's off. That was just farcical. But Ruth Richardson needs to pipe down because she could do things, and did do things, that simply aren't possible for this Finance Minister to do under MMP.
And also, it's a lot harder to get elected under MMP and to have a big say in the direction of the government unless you've got a big platform. So anything Nicola Willis does has to be with an eye to being the biggest party to form a government.
So, I tend to think she's right, that if you've got the Taxpayers' Union going, you're too soft, you're too wet, you're too pathetic, you've got Labour going, you're too cruel, you're too harsh, you're too brutal, then she's pretty much on the right track.
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