Friday, 7 February 2020

Finance Minister weakens fiscal resilience in face of pandemic

“This morning at the Finance and Expenditure Committee, Finance Minister Grant Robertson came up short in answering the simple question: what has the Government got for its extra spending?”, says ACT Leader David Seymour.

“The 2017 Pre-Election Economic and Fiscal Update forecast Government spending of $83.6 billion for 2019. By the time 2019 arrived, the Government actually spent $87 billion. When asked what the taxpayer had got for this, Mr Robertson said most of the money had been given away in cash transfers. Mr Robertson also mentioned mental health but again couldn’t describe the specific outcomes achieved.

“Looking further ahead, the most recent forecasting for next year predicts Government expenditure at $98 billion, up from forecasts of $89 billion made before the election.

“This expenditure has come at a time of strong performance in the wider economy. Anyone can sail downwind, but loose expenditure policy makes New Zealand vulnerable in the face of a downturn.

“If the coronovirus restricts trade for any length of time, the Government will find itself with far less fiscal room to support the economy using tax cuts or stimulus spending.

“Good governments recognise good times when they see them and prepare for bad times. This Government’s failure to do so by indulging in low-quality spending will look very silly if and when economic conditions change.”