The NZ Budget Blues
In the May 19 Budget the exact state of the New Zealand economy will be revealed for all to see. It will not be pretty.
New Zealand’s Minister of Finance, Bill English recently made remarks to the effect that New Zealand might have a certain competitive advantage in attracting capital over Australia, because wages are 30% lower. A record fiscal deficit of around 8-9% is expected to be announced. Before the Christchurch earthquake the government was borrowing $300 million a week just to pay the bills and growth has been moribund for a year. The expected earthquake bill of $15-20 billion has only added to this already grim situation.
This is set against a backdrop of a doubling in core crown expenditure over the past decade, and a rise in the government spending to GDP ratio to from 35% to 45%.
The question for this budget is whether the current National-led NZ government will take any meaningful steps to help address this situation.
Using relevant indicators, and material from the newly released budget, New Zealand Policy Analyst Luke Malpass will guide the audience through the last decade of government profligacy to explain why, after a decade of economic growth and consistent budget surpluses from the mid 1990s to 2008, New Zealand suddenly finds itself in a hole of Greek proportions.