Election year Budgets are usually more generous but the high, and growing, level of government debt shows why this year’s one won’t be.
Finance Minsiter Bill English says private credit growth has flattened over the past two years as businesses and households increase savings.
But government debt is still rising and is forecast to peak at $73.4 billion in 2016/2017.
That’s not a pretty picture but we can do something about it.
We want to lift our national savings – that’s households, businesses and the Government – because it reduces New Zealand’s vulnerability to foreign lenders, reduces pressure on inflation and interest rates and helps exporters by taking pressure off the Kiwi dollar.
However to achieve this the Government needs to reduce its own borrowing, which is forecast to drive up New Zealand’s national debt over the next few years.
We’ll have a real choice at the election between National’s plans to reduce government debt or any of the parties on the left which will give us a borrow-and-spend-more Labour-led government.