International Turmoils Gives English A Fiscal Break
May 14th, 2010
The international turmoil triggered by Greece’s debt crisis has, in a sense, made Finance Minister Bill English’s task easier. The Govt has already proved its fiscal rectitude, and it won’t be under the kind of scrutiny from ratings agencies which is provoking nervousness in global markets about the sovereign debt of many European countries, even the UK. English has already done the hard yards to suck out money from low-priority programmes (about $4bn in total over 4 years), and direct it to areas which the Govt has identified as high priority. Even so, there may be a backlash in, for example, the early childhood education sector, where a cap on rising spending is to be imposed (despite a 10% increase in this year’s Budget).
As the European debt crisis is demonstrating, middle class welfare has become the political deadweight which is destroying national balance sheets. Aust’s Treasurer Wayne Swan has also done English a favour in his Budget this week by not slashing the corporate tax rate in particular. Aust expects to get back into surplus earlier than NZ, though its forecasts for economic growth in the next 3 years are only a percentage point or so, per year, ahead of those Treasury may make in next week’s Budget. (More details on Aust’s Budget see this week’s Australian Edition.)
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Duncan Cotterill