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Mike's Minute: The Budget showed the bigger picture is a disaster

Mike Hosking,
Publish Date
Fri, 19 May 2023, 9:40am

Mike's Minute: The Budget showed the bigger picture is a disaster

Mike Hosking,
Publish Date
Fri, 19 May 2023, 9:40am

The real value of the Budget for me is not the so-called lolly scramble people seem to expect each year.

A bus trip here, a prescription there and a handful of EV chargers - that's rats and mice.

The real value of a Budget is the big picture and the big picture is a disaster.

For what it's worth, the gaming deal is not bad. But then again, it's classic Labour. Yes, we give rebates for film, but not for gaming.

Why not?

So they fix that. But do they? Our deal is still outdone by the Australians. So where are you going to go to make your games?

Anyway, to the big stuff.

There is more debt, much more debt, and the Government has to go to the bond market for billions more - in total $120 billion.

Deficits are worse than forecast. We're $7 billion in the red this year, $7.6 billion next year. If they are lucky, they might see a surplus by 2026.

Astonishingly, they see inflation still dropping to 3.3 per cent next year. We will have to be in one almighty recession by then to kill demand because, with the Government spending, I can't see how it doesn’t stoke inflation.

They are forecasting lower tax takes for the next four years. So, more spending, less tax and more debt.

What a combo.

The prediction is GDP growth next year of 1 per cent and 2.1 per cent by 2025. I think we are guessing at anything beyond that point, aren't we?

But for this year they, they being Treasury, see 3.2 per cent. I don't know how you come to that number, unless it's through spending, and if it's through spending and it leads to growth, it fuels inflation.

Yes, tourism helps and there may be migration. But it's a heroic number.

We've got Crown debt at 39 per cent this year and 43 per cent for the next. No, it's not like a lot of countries, as I am sure Grant Robertson will tell you. But we aren't like a lot of countries. We are tiny, with limited means of revenue generation, so 43 per cent is dangerously high for us.

The tragedy here is, given all the spending that has been done and all the debt that has been incurred, where are we for all that? Are we feeling good? Are we growing well?

You know the answer.

Small credit to Robertson - I called it right and there was no rabbit. There was no election splash.

For a spendthrift like Grant, he contained himself when the pressure must have been enormous to go for broke now, to try and save the election. In that sense, in the “hand out the lollies” sense, it was underwhelming.

And that is actually good because when you see those big numbers, and the big picture, we are up “you know what” creek.

And I don't see the paddle.

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