Of course there's a hole

homepaddock

Aug 4

Mike Hosking is right : the size of the hole in the Budget is irrelevant :

It doesn't really matter whether it's a $20 billion hole or not.

It might be $19.6 billion. The fact is, the Government has a hole, a massive fiscal hole that will, before the election, be fully exposed in what they call the PREFU. . .

As of yesterday the claim is they now face a $20 billion hole as a result of Treasury being super wrong and the corporate tax take tanking. And as off yesterday, we had the meetings of all the public sector bosses who were told to start saving.

The economic irresponsibility of all this should not have to be spelt out. It was already bad enough.

The debt explosion was already bad enough. The lack of care and return on expenditure was already bad enough.

The stagflation environment we find ourselves in was bad enough.

The recession was bad enough. The prospect of a double-dip recession was bad enough.

Grant Robertson says the $20 billion isn't true.

But we know enough about Grant Robertson to know the sort of pedantic games he plays.

If it isn't $20 billion, it'll be close. It'll be huge and, yet again, they are caught with their fiscal pants around their ankles.

The only upside is thank the good Lord is that an election is close.

It's a chance to close the chapter, lick our wounds and put an astonishing era of ineptitude behind us.

Of course there's a hole. When the government's been borrowing and spending as it is, this isn't a surprise.

Exactly how big the hole is isn't material. It is big and the government's call for public service savings is too little, too late :

. . . The Herald has confirmed public service chief executives met with Robertson as recently as today. It is understood the fiscal outlook and spending restraint was at the very least discussed, although the idea of cuts of 10 per cent was not.

Treasury is currently putting together the Pre-Election Economic and Fiscal Update (Prefu), its most up-to-date set of forecasts.

Robertson said it was no secret that the Government's revenue position had been worse than forecast.

That it's no secret makes the government's failure to do something before now worse and it's another sign of how unsuited it is to be running the country.

"We've seen from the Crown accounts that where the Treasury had hoped we would be in the forecast, we are not. So we have an ongoing programme of work that involves discussion with the public service - that's regular," he said.

Bosses have also been advised to restrain spending growth - although this is hardly unusual.

Robertson foreshadowed tough decisions when answering a patsy question in the House, and in a press release issued earlier on Wednesday.

"Further hard choices may be required as we navigate a pathway through this deteriorating global environment," he said. . .

National Finance spokeswoman Nicola Willis said she had been aware of discussions in the public service about the deteriorating fiscal position.

She said it was a pity the Government was only now looking at restraining its own spending.

"There are now widespread leaks and reports suggesting the Labour Government is in financial panic mode," Willis said.

At every opportunity the Labour Government has resisted the need to instil financial discipline and fiscal rectitude, she said.

"Now the cupboard is bare," Willis said.

Former Finance Minister, the late Sir Michael Cullen, boasted that his outgoing government has spent the lot in 2008. This government has not only spent the lot, it's borrowed to do it and has very little positive to show for it.

Back room public service staff have ballooned while people on the frontline of public service - health professionals, police, teachers, social workers . . . are being over worked and under paid; and infrastructure, roads in particular, has suffered from underspending.

The government has borrowed and wasted too much and spent far too little on necessities.

The recession is biting and the difficult season facing most, if not all, of the primary sector which earns so much export income and is such a big part of the domestic economy, will make it worse.

Quite how big the fiscal hole is doesn't matter.

What does matter is that we get a National-led government in October to repair the damage and get the country back on a positive track and the only way to do that is to vote National or Act.