Faster surpluses needed

Brian Fallow reports:

The Treasury is calling for a swifter return to fiscal surpluses than last May’s Budget envisaged, even as the Finance Minister warns of higher deficits in the short term.

Treasury Secretary John Whitehead, in a speech to Victoria University’s Institute of Policy Studies yesterday, spoke of the need to reduce the Government’s net debt.

It would provide a buffer against future economic shocks, prepare for challenges such as the ageing of the population and free up resources for growth in exports.

Whitehead is correct. I don’t think people realise how finely balanced things are.

On average we have a recession every ten years or so. By the time of the next one, we need to have started repaying debt significantly.

The higher costs of an ageing population will also start to hit in around ten years time.

Throw into the mix, the likely inability of Labour to keep spending under control when they return to Government at some stage this decade.