The HYEFU

Treasury has a useful pdf summarising the Half Year Economic and Fiscal Update. Key data includes:

• GDP forecast to grow at 3.7% this year and 3.5% next year
• Unemployment rate to drop to 4.2% by 2019
• Net migration to slow from 70,000 to 20,000
• Inflation to sneak up to 2%
• OBEGAL surpluses of:
  • $0.5b in 2017
  • $3.3b in 2018
  • $5.4b in 2019
  • $6.8b in 2020
  • $8.5n in 2021
• NZ Super Fund contributions to resume in 2021
• Net debt to reduce from 2018
• Cost of NZ Super to go from $12.3b this year to $16.0b in 2021
• Core crown expenses to go from 29.4% of GDP to 27.7%
• Core crown revenue to go from $76.1b this year to $97.1b in 2021

There is no doubt in my mind that tax cuts are a matter of when and how much, not if. No National led Government can soak up an $8.5 billion surplus by only increasing spending. That is what Cullen did.

We are one of the few countries in the world to have such a great set of books, and such strong economic growth forecast. Surplus give options – you can pay off debt, reduce taxes and increase spending. A sensible government will do all three, not just one or two of them.