Saturday, 30 May 2009

Budget Bill, part 2

Budget Bill says, he will consolidate the Government’s fiscal position, keep debt under control and ensure that Crown finances are properly managed (1). We read between the lines. We say, in defianace of received economic wisdom, and against the example of every other developed economy in the world, you're going to try and balance the budget during a recession. And build a cycleway.

Budget Bill says, the Government has been active in softening the sharp edges of this recession. We say, watch your metaphors, Bill. We say, you seek to blunt sharp edges, not soften them.

Budget Bill boasts that the ReStart package is already helping around 1,400 families. We remember the 1,200 who have already tasted the razor in the public service. We think they would probably have their jobs back. We don't think they'll appreciate ReStart.

Budget Bill tells us, he's fast tracking $500 million of infrastructure investment in school improvements, state housing upgrades, and roading projects. We remember him telling us he was doing this in February (2). We work out this is money allocated by the last government. We suspect he wouldn't mention old money if there was any new money to brag about.

Budget Bill says, what's important is improving the business environment and removing roadblocks to growth; investment in productive infrastructure; and improving the way government works. We think, the environment is as important as the business environment. We think, some of these roadblocks might be there for a reason. We think, there is other infrastructure that needs investment. We think, we might have different ideas about what improving the way government works. We think, Budget Bill might be speaking in code.

Budget Bill tells us, the business environment will be improved by a thorough review of government regulation. We don't like the sound of this. Budget Bill reminds us about streamlining and simplifying the Resource Management Act. Budget Bill says, he will change the Overseas Investment Act, review telecommunications regulation. He says, he will review a range of environmental legislation, will redesign the legislation to allow quick and efficient decisions for productive investment We put two and two together.

Budget Bill says, the process of creating regulation will be considered by the Regulatory Responsibility Taskforce overseen by Hon Rodney Hide, as Minister for Regulatory Reform. We choke on our drinks. We ponder Rodney Hide being in charge of regulation review. We think of new cliches to replace the fox being in charge of the henhouse. We see portends of the apoclaypse.

Budget Bill says, the next three years will see extensive investment in transport, housing and electricity transmission and generation. We say, in public transport, state housing and renewable generation. We note the absence of these adjectives. We are distrait. We think, what was he saying about streamlining regulation? We foresee coal fired power stations besmirching North Island.

Budget Bill says, he will create a National Infrastructure Unit. We say, will Rodney Hide head this as well? We see further portends of the apocalypse.

Budget Bill says, he has a plan to balance the Government’s books. Budget Bill says, we spend too much. Budget Bill scares us with figures. Budget Bill says, current projections show debt will reach 48 per cent of GDP by 2013 and 70 per cent by 2023. We are frightened. We check with Treasury's BEFU 2009 [pdf] (3). We find Bill is using the downside scenario to frighten us. We also find a caveat he overlooked - these scenarios play out "in the absence of any further response by government" (4).

Budget Bill says, we can not allow debt to accumulate on this scale. We think, it is pretty unlikely it ever would. We think, you wouldn't know that from what Budget Bill is saying. We think, Budget Bill might be being prudent. We suspect, Budget Bill is probably trying to justify his strangling of public service.

Budget Bill says, the Government’s priority will be to rebuild its finances so another
generation can cope with future recessions. Budget Bill says, this Budget starts the process of changing Government spending priorities. Budget Bill says, he has $1.45 billion a year new money for us. Budget Bill also says, he has found $500 million a year by reallocating money set aside for 'low priority' projects. We wonder what programmes were cut. We wonder how many contracts were cancelled. We wonder, how many people were made redundant. We wonder, were our priorities were the same as Budget Bill's?

Budget Bill says, here's money for health and education. We say, please sir, can we have some more?

Budget Bill says, more than 180,000 homes built before 2000 will have access to grants for insulation and clean heating over the next four years. Most households will be eligible for grants of up to $1,800 and those with Community Cards will be eligible for additional funding. We say, this is good. We wonder, what did Jeanette and Russell threaten to do to him to make him do this?

Budget Bills says, the stimulus to the building industry will provide green jobs to help cushion the effects of the recession. We say, this is true. We say, you should be doing more of this.

We say, you see, Budget Bill? Public spending can be good.
1 - "Budget Speech," delivered by Bill English MP on the 29th of May, 2009. (http://www.treasury.govt.nz/budget/2009/speech/b09-speech.pdf)
2 - "Fast-tracked public projects give $500m boost," unattributed government press release, dated 11th of Febrruary, 2009. (http://www.beehive.govt.nz/release/fast-tracked+public+projects+give+500m+boost)
3 - "Budget & Economic Fiscal Update 2009: downside scenarios," published by Treasury, 28th of May, 2009. (http://www.treasury.govt.nz/budget/forecasts/befu2009/befu09-pt2of6.pdf). I'm not able to verify where he got the figure of 70% by 2023 from, but it bears a passing resembleance to the downside figure of 76% mentioned in Treasury's DEFU 20008 (http://www.treasury.govt.nz/budget/forecasts/eff2008/eff08.pdf)
4- ibid.

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