In 2009, as New Zealand tried to drag itself out of the Global Financial Crisis – and before the Canterbury/Christchurch earthquake sequence – the Treasurer, the Honourable Bill English famously said that New Zealand would achieve a surplus in 2014-15. To support this goal Mr English has cut, in some cases right to the bone, as much flesh off the Government agencies as he has been able to. And still he tries. But with 2015 now nearly half way through, perhaps this was a goal that was never going to be achieved.
As a centre-right Government, not surprisingly National is averse to tax rises or new taxes being introduced. It has said no to every tax proposal that has been made, however reasonable it might be. It has vetoed a capital gains tax on holiday properties. It has vetoed increasing tax on higher income earners.
National has had to overcome some substantial domestic challenges. A sky high dollar – which is in part exacerbated by the refusal to introduce speculation controls – has curbed the income from exports, whilst a pair of droughts in early 2013 and 2015 have cost farmers. It also has to be noted that 31 financial institutions fell over during 2006-2008, costing New Zealanders several billion dollars in savings including $1.6 billion written off on 01 Septemer 2010 when South Canterbury Finance collapsed. Three days later, a magnitude 7.1 earthquake hit Canterbury, causing $4 billion in damage.
But it was the Christchurch earthquake of 22 February 2011 that hit the hardest. Aside from killing nearly 200 people the damage from it and a pair of big aftershocks on 13 June 2011 ran into between $35-40 billion. With significant payments still outstanding from insurance companies and the Government having committed significant sums still yet to be spent on rebuilding activities, there is a lot of money locked up.
A commitment to partially selling numerous state assets has not gone down entirely to plan. Many of the “Mum and Dad” investors National was looking to target simply do not have the financial means to invest, or if they do, they are preferring to use those means for other purposes.
On the international front, things have not been any better. The Global Financial Crisis still holds a formidable grip on many European nations, whose economic situation has not noticeably improved in nearly seven years. The situation in several countries is tenuous to the extent there is concern that they might exit the Euro. The rise of fringe parties in the United Kingdom, France, Greece and other countries points to a social fraying that is as much a reflection of domestic policies gone bad as it is their economic situation. The potential exit of Greece or another nation could damage the Euro beyond repair, sending shock waves through international markets including New Zealand.
To give the impression of being serious about fraud, it has waged a relentless campaign against abusers of social welfare benefits whilst ignoring as far as reasonably possible cracking down on corporate fraud. To be fair though, cracking down on corporate fraud is a dicey issue because if corporates do not like what happens in one country they might either sue that country for enacting what they see as unfair measures or simply withdraw from that country altogether, possibly costing thousands of jobs.
As anathema to National as it is, the tax medicine they stubbornly refuse to take, might be the best answer.