A path to surplus or a bridge to nowhere?

The Herald reports:

Prime Minister Chris Hipkins is quietly confident Treasury will show the Government meeting its fiscal rules, which require a surplus to be forecast in the next four years.

Treasury independently forecasts whether there will be a surplus or not, but the Government has input into whether it wants to increase or reduce spending to achieve one. It releases those forecasts next Tuesday when it opens the books releasing the Pre-Election Economic and Fiscal Update.

Hipkins said he was confident that the Government’s decision to trim $4 billion in spending over the next four years would be enough to hit a surplus, despite a recent downturn in the economy which saw corporate tax revenue in the year to May come in $2b below budget forecasts.

A forecast path to surplus in four years time is about as useful as a bridge to nowhere.

If one had confidence the Government could keep to its spending track, then it might have credibility. But let’s look at what Labour said in 2019 with its wellbeing budget what it would be spending in 2023?

They said core crown expenses in 2022/23 would be $106 billion or 28.8% of GDP. In reality it looks to be $128.2 billion or $22 billion more than they said they would do. As a % of GDP is is 32.5%.

So trying to tell us that we may get back to surplus in four years with Labour is reliant on us thinking a Labour/Green/Māori Party Government would be far more restrained in its spending that the current Government!