Prefu; economy on track for surplus

In a far cry from the Decade of Deficits Day in 2008, the 2014 Prefu, the symbolic pre-election opening of the books, has passed with barely a ripple; Stuff reports:

The economy is growing strongly, but Treasury has cut the amount it expects to raise in tax and with it, the size of future surpluses.
Today the Treasury released the pre-election economic and fiscal update (Prefu), giving an update on the state of the Government's books just a month out from the election.
Crucially, Finance Minister Bill English's long promised surplus for 2014/15 is said to be on track by Treasury, the Crown's official bean counter. The surplus is, in fiscal terms, wafer-thin at $297 million, down from $372m in the last forecast, and equivalent to just 0.2 per cent of total economic output.
But the outlook for surpluses in the following years is markedly weaker than it was in May's Budget, delivered just two months ago.
In each of the next three years Treasury has cut the projected surplus by $500m, meaning the combined surplus between now and mid-2018 is $6 billion, some $1.5b below what it was expected to be in autumn.
The lower surplus forecasts means there is less scope for new spending by the Government, and that Crown debt would take longer to reduce.
Today Treasury said debt, in nominal terms, would now peak at $67.9b in 2018. It was expected to peak at $65.5b in 2017. With debt taking longer to fall, Treasury said, based on current settings, payments to the NZ Superannuation Fund, put on hold when National came to office as the recession hit, would be delayed a year to 2020/21.
Nevertheless, the economy in general is "growing strongly", Treasury Secretary Gabriel Makhlouf said.
Forecast to grow at  an average of 2.8 per cent over the next four years, Makhlouf said this was "above its sustainable long term capacity to grow" meaning inflationary pressure on the economy is building with a strong residential housing market in Auckland and Christchurch. 

That the economy is forecast to continue to grow strongly, but not too strongly, is good news indeed. Unemployment is falling, more people are in employment than ever before in New Zealand's history, exports hit $50 billion for the first time ever, and inflation remains low. Much of that can be attributed to Bill English's "steady as she goes" management of the economy through the Global Financial Crisis and the recession which followed. 

And Treasury Secretary Gabriel Makhlouf sounded a warning today in releasing the Prefu:

More good news; the Aussies envy us!

Australian Federal Treasurer Joe Hockey is in town. And as he ponders the sea of red ink in the books he is trying to balance, a legacy of Labor/Green profligacy across the ditch, the politics of envy have reared their head, in the nicest possible way; TVNZ reports:

Joe Hockey has called New Zealand's economy "the envy of the world" during his first visit here as Australian Treasurer.
Mr Hockey told TV ONE's Breakfast today that Australia could learn some lessons from their Kiwi neighbours.
"New Zealand has done a splendid job, the Key government is a standout government around the world and as a result of that it is heading towards a surplus," he said.
"New Zealand is starting to live within its means."
Delivering his first budget this year, Mr Hockey said he was forced to slash spending by $10 billion because of the previous Labor government's overspending.
"They took us to a position where if we don't take immediate action we will face much bigger debts," he said.
"If you make the difficult but important decisions up front then you get the benefits down the track. We've got a long way to go to catch up to the budget position of New Zealand."

Joe Hockey started out in the same position that Bill English was when he inherited the New Zealand books in 2008. At the time, Treasury was forecasting a Decade of Deficits. History will show English's parsimonious financial management has done the job, and the books are headed back into the black four years ahead of prediction.

It's rare that our trans-Tasman cousins are so effusive about New Zealand, but on the issue of the respective economies, Joe Hockey has little option. He inherited a mess from Kevin Rudd, and he could do much worse that take some advice from Bill English as to how to get his books in order.

In the meantime, migration to Australia has almost dried up as the former Lucky Country is down on its luck. Thousands of those who left New Zealand during the recession to try their luck over the ditch are returning as New Zealand returns to economic prosperity, and as the Australians recover from their Rudd/Gillard hangover.

Who's the Lucky Country now Joe?