The $7.5b question: tax cuts; election spend up; something else?


The biggest government surplus in a decade has political and economic commentators thinking: What will Treasurer Grant Robertson do with a $7.5 billion surplus?

A few certainties arise even before that question can be considered:

  1. 2020 is election year and there will no doubt be thoughts of holding at least some of it to throw at election promises in a years time
  2. Certain parties who do not need to be named are going to want – and indeed have already promised – tax cuts, specifically income tax cuts
  3. With a shaky world economy getting ever more jittery with every passing month and the domestic economy not looking so hot, economists and some politicians are suggesting that the government needs a spend up to get things moving

I have long had ideas about what to potentially spend on in the past, which have been largely social areas such as health, education and social welfare. My understanding is that the calls in 2019 are for greater investment in infrastructure critical to the 21st Century.

This suits me fine, as I have a few ideas of what it could be spent on:

  1. Research and development of a potential biofuel programme relying on the waste stream for an appropriate fuel source – take several years to get this started, but if successful modest scale biofuel plants could be established in Auckland, Wellington and Christchurch
  2. Research and development of a Waste to Energy plant for the West Coast, which would be self sufficient in terms of electricity use
  3. Examine electrification of the South Island segment of the Main Trunk Line
  4. Invest in 5G technology nation-wide instead of letting the telecommunications companies do so for reasons of national security
  5. A substantial acceleration of the billion tree programme that was announced by the Government in 2017
  6. Support a mini-home scheme

But what if the Government decided on tax cuts? Whilst there might be enough to justify some I am personally against income tax cuts because the wealthiest are always the winners, when all should be able to gain fairly from them. Such a move would certainly not be welcomed by the left wing of New Zealand politics, who believe with justification that this would only favour the very few.

A more intriguing alternative is one that almost never seems to be up for discussion. Despite the right talking about fiscal responsibility, under the last several New Zealand governments significant debt has been accrued and much of it is still outstanding. Has the ever so radical idea that New Zealand should actually pay more  of it back not strike one as a useful idea?

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