So the government is producing fiscal surpluses after years of deficits following the Christchurch earthquakes.
The surplus (OBEGAL) projected for 2016/17 is around $720m and then rises to a whopping $6,681m by 2020. Eventually, even after using some of the surplus to lend to students and capital infrastructure, there will be cash in hand to either repay debt or reduce taxes.
So this is going to justify tax cuts bribes in the 2017 election? If so who has sacrificed to produce these surpluses? Not the old.
NZ Super payments have increased not only because of demographic change but also because real rates of super have increased with wage growth. For example the single rate has gone from $256 to $385 net a week since 2005. An increase of 50%..
It is absolutely appropriate to link super to wages if older people are to keep up with living standards generally. In 2016 alone the rate increased just over $10 a week but is not heralded in the budget. Benefits got a zero increase. The super increase is new real spending that should be mentioned BUT doesn’t have to be. Why not? Because it is automatic.
No such annual automatic increase for income support for the young. Working for Families in 2010 was $3.1 billion in 2016 dollars. To stand still this means the 2016 spend of $2.4 billion should actually be $700m higher. The government doesn’t have to fess up to cutting Working for Families because it happens automatically. This follows from a process it set in train in the 2011 budget. CPAG has complained endlessly about this. Who of the other commentators even noticed? A clever coup for Bill English.
Let us be very clear who will pay for those tax cuts. If WFF had been adjusted properly for inflation since 2010, National would be spending another $700m on it, in this year’s budget. If the exclusion of around 200,000 of the poorest children from the benefits of the In Work Tax Credit of at least an extra $72.50 a week (more for larger families), was fixed, National would have to spend another $600m. So it has saved $1.3 billion in this year alone out of the pockets of the worst off. This is how Bill English generates surpluses to justify John Key’s election year bribes of tax cuts to the rich.
If you are even slightly perturbed about this incredible imbalance: that along with housing the attack on Working for Families has a lot to do with the rapid increase in the working poor, please visit, comment, support, and share