Budget 2011 – which bandwagon should we jump on?
Love it or loathe it – the Budget for the next year has been set, and as usual there are some changes that have created big discussions over the past week. Surprisingly the coverage has been fairly balanced.
Last Thursday Bill English presented what some would call an ambitious budget to get the country out of the red (negative $16.7 billion to be accurate). In order to accomplish this, cuts have been made across the board, the most controversial being to Working for Families, Kiwisaver, ACC and Student Loans.
The Canterbury Earthquake has had a huge impact on the economy, costing the country $6.08 billion so far. Apparently there has been no other known natural disaster that has had a bigger impact on a developed economy, with the total damage amounting to $15 billion, a staggering 8% of GDP. By comparison, Japan's earthquake and tsunami (despite causing massive widespread destruction and death) caused damage equivalent to 3-5% of Japan's GDP.
As is the norm, the Opposition has accused the Government of lacking a strategy for economic prosperity and crystal ball gazing to determine its forecast – which is to have the country in surplus by 2014-15 and reduce borrowing from next year by approximately 75%. Somehow the focus has been on the reductions in tax credits. The vast increases in budgets for health, early childhood education and the Canterbury Earthquake Recovery Fund, as well as the Ultra-Fast Broadband and connecting schools initiatives have been conveniently forgotten, along with the big cuts in the public sector.
I agree with KPMG, which in a blog stated that "sometimes a tight and boring budget can be a good thing", as getting the country’s fiscal and deficit position under control is the big priority. Who wants to be living in debt? More to the point, we are lucky enough to live in a country where people have the option of welfare benefits and contributions to retirement savings, let alone access to public healthcare and accident compensation.
From a PR perspective, I think both John Key and Bill English have handled themselves well in the media and haven't come across at all defensive. They have put forward a Budget they truly believe will benefit the county, and are sticking to their guns – election outcomes be damned!
At the end of the day, everyone is entitled to their own opinion, and luckily we live in a democracy where we can vote on the issue (on 26 November this year in fact).