Budget Papers

Ian Llewellyn of NZPA has a good article summarising some of the budget papers which have been released by the OIA.

I feel a bit sorry for Treasury staff having to write about how the cash surplus rather than the operating surplus determines what can and can not be afforded. They must find it hard to keep a straight face when dealing with such nonsense. I’ve said it many times – no sane economic manager funds capital expenditure wholly out of operating income.

If you really really really think that is the sensible way to run an economy, then logically you should argue that any SOE sales (the opposite of capital expenditure) can fund tax cuts?

Depreciation and interest on borrowing flow into the operating surplus, and that is how capital flows are handled.

I can’t find a single other country in the OECD which tries to argue the cash surplus over the operating surplus as the best indicator of what a country can afford. Hell even Dr Cullen himself argued that OBERAC was the best measure of surplus, until he needed to come up with an excuse not to reduce taxes.