Greens Finger Motorways In Debt Mess


The Government’s painting of the latest dismal economic situation this afternoon prompted prime minister John Key to warn there will be “no lolly scramble” in next year’s budget - presumably that includes dampening any hope of money towards a CBD rail link.

Finance minister Bill English says next year’s Budget will keep new spending initiatives within a $1.12 billion annual operating allowance and a $1.39 billion capital allowance. (Puhoi highway is already underway).

But the Greens’ co-leader Dr Russel Norman says are the books shows the government is “literally now borrowing money to pay for tax cuts for the well-off and motorway projects with negative economic returns.”

He said the Government’s poor quality spending on uneconomic new motorways and ETS subsidies for polluters had a negative impact on the books.

The Treasury statement says NZ’s economic outlook is a little weaker than expected at the last Budget.
“Growth is lower this year on the back of a slower than expected rebound in household spending. Underlying economic growth is weaker over the 2011 and 2012 March years, although this is partially offset by earthquake-related rebuilding activity which pushes up growth in the June 2011 and June 2012 years. Nominal GDP is expected to be a cumulative $5.2 billion lower over the 2011 to 2014 period than expected at Budget 2010.”

On infrastructure the Government statement says:

“The Government is investing heavily in ultra-fast broadband, road, rail and upgrading the national grid. Within land transport alone, $10.7 billion will be spent over the next 10 years on state highways, including Roads of National Significance. We will also bring a stronger commercial discipline to our investment decisions. An updated National Infrastructure Plan which sets out the Government’s goals for infrastructure and a plan for how these will be achieved will be released in 2011.

“We will improve the way we procure social assets, and we are exploring a range of procurement options to ensure value for money from Crown investment. An important milestone in this process has been the Government’s announcement last month that it is taking the next step towards implementing a public private partnership for delivering a new prison at Wiri, South Auckland.”

In non-Treasuryspeak, we're in the crap!

Treasury says as well as growth being weaker than forecast at Budget, economic activity is anticipated to have lifted only gradually over the second half of this year.

” The economic recovery is expected to continue to be gradual, with growth weighed down by subdued domestic demand. Temporary factors and events are expected to lift growth to 3.4% in the March 2012 year, but the current expansion is forecast to be weaker than recent recoveries, with growth expected to be slightly under 3% beyond 2012.

“The outlook is characterised by muted growth in private consumption as households are expected to remain cautious in their spending and investment decisions. Business investment is forecast to increase from current levels, boosted by the earthquake recovery and a degree of catch-up by firms. Even so, the forecast recovery is weaker than what would typically have been expected following the sharp contraction that occurred during the recent recession. Government spending is also expected to be restrained, reflecting difficult fiscal circumstances.”




  1. greenwelly says:

    Sigh, Dr Norman is being a boofhead and he knows it

    - Those on the right could equally yell that the government was “literally now borrowing money to pay for cycle paths and middle class welfare like working for families and free student loans”
    - it makes a great headline, but doesn’t achieve much.

  2. karl says:

    How convenient for Mr English and Mr Joyce “Look, the pot is empty, we can’t finance your little wishlists even if we wanted to - now go away you pests”.

    Oh, and Greenwelly, I disagree. The cycleway money is $50 million, the new motorway budget (NOT the transport budget) is about 3,000 million over the same timeframe. Smoke and mirrors. Look at the big ticket items, not the chump change.

  3. karl says:

    Plus, the cycleway money is a one-off with no certainty of future top-ups. The motorway spending is proposed to go on yearly to the tune of a billion for the next decade.

  4. Cam says:

    Have to agree i hardly think you can compare the money put into cycleways with whats going into motorways. 3 projects with negative BCRs - Puford, TG and the Waikato expressway have about $4 Billion dedicated to them. Putting those on hold would make a difference.

    “We will also bring a stronger commercial discipline to our investment decisions” - I take it this is a new Tui ad

  5. Kurt says:

    Although there were tax cuts (that were flagged as a poor policy) there have been so many tax rises to counter those, with interest ,that at some point something has to give, and its spending.

    Now as the government tries to cut back and thereby removing money from the economy things get worse.

    Bailing out South Canterbury investors is one of the most infuriating and its costing the rest of us dearly.

    I agree with Fran O’Sullivan on one thing, those who preach a market driven economy with no state interference are often those who also expect a socialist bail out when their greedy little gambles turn bad.

    Ditch the holiday highway, we can’t afford it and its plainly uneconomic full stop.

  6. DanC says:

    So their’s no money for the CBD rail loop, but plenty for roads? And Aucklanders are dealing with commuter related stress which is holding back it’s productivity… Shame on you Joyce for being set in your old fashioned ways.

  7. Chris says:

    National party governments are good at one thing it has to be said. Running deficits. When have they ever run a surplus?

  8. Matt says:

    Kurt, actually there’s been precisely one tax increase: GST. Everything else has been cut, unless you count removing the R&D tax credit (which was a stupid policy when we need to be encouraging innovation).

    National’s cut taxes and cut taxes, and raised only a single one as a counter.

  9. Luke says:

    fuel tax increased to fund the RONS, also taxes effectively increased on savings due to less tax credit.

  10. Matt says:

    Luke, it was Labour who put through the fuel tax increases. They just had a long lead-in time. There’ll be increases in 2011 and 2012, too, and from the same bill that was passed for the 2008 Budget.

    There’s never been a tax credit on savings. Ever. The interest I get paid on what’s in my savings account is taxed at my marginal rate, no rebate or credit whatsoever.
    Don’t conflate KiwiSaver and savings. There’s a tax credit on KS, yes, but the only part that got changed was reducing the compulsory employer contribution. The credit to the employee remains $1020 or whatever it was when National took the reins.

  11. Kurt says:

    Matt, you are wrong. Petrol excise tax has gone up 2 times under National this term. Remember when Steven Joyce didn’t want to unfairly penalise anyone with the PT fuel excise tax.

    ACC levies have skyrocketed and that levy is a tax by any other name.

    SOE’s have been instructed to lift their dividends to government under National, and of course it is passed on to consumers directly or indirectly, a clever way of recovering so called tax cuts by taxing us another way.

    And of course GST which is fine if you were paid a massive salary but too bad if you are middle to lower,.

  12. Matt says:

    Kurt, still not National-imposed fuel taxes. They may not have abolished them, but they didn’t pass them into law either.

    This argument is pointless. You’re calling pretty much everything a tax, when they’re not. Tax is tax, levies are not taxes, increased prices are not taxes. They may make things cost more, but they’re not taxes.
    If you want to talk about all the ways that National has increased living costs, that’s one thing. But talking about all the taxes they’ve increased when there’s only one for which they’re actually responsible is just stupid. GST is the only tax that National have increased, and that was to counter cutting some other taxes.

  13. Matt says:

    Luke, still taxes put in place by Labour. There’s a multi-year excise increase that went through in the ’07 or ’08 Budget, and National haven’t canned it because it gives them money to pay for Joyce’s toys.


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