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Mike's Minute: The fiscal hole is the last economic straw

Mike Hosking,
Publish Date
Thu, 3 Aug 2023, 9:52am

Mike's Minute: The fiscal hole is the last economic straw

Mike Hosking,
Publish Date
Thu, 3 Aug 2023, 9:52am

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.

The scandal here is several-fold.

The Government can, to a degree, hide behind Treasury. We asked at the time and the likes of Grant Robertson said they had no choice but to accept Treasury's forecasts.

The reality of Treasury is they couldn’t hit the side of a barn with a banjo.

What we were asking about post the Budget, which you might remember was back in May, as in a couple of months ago, was just how was it that the Government were forecasting a return to surplus, when in all reality the prediction looked heroic to say the least.

We have since found out that panic ensued before the Budget when it was discovered tax take was dropping.

Robertson was committed to all the spending, thus was faced with pushing the return to surplus out yet another year or getting someone to shuffle some numbers, light a fire, create some smoke and hope for the best.

They did the latter and on Budget Day the forecast surplus was an embarrassing handful of millions, which in Government terms is parking metre money and we all knew it.

Anyway, since that charade it's gotten worse. 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.

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