Budget 2012: Cough it up

02:02, May 25 2012
Bill English
COST CUTTER: Bill English with copies of the 2012 Budget.

Bill English's fourth Budget pinches the pennies, raids nearly every piggy bank and even plunders the Government's rainy-day fund. No-one, it seems, is safe – even kids with an after-school job have been frisked for extra revenue to help fill Government coffers.

If there was any doubt that the job of scraping back into surplus is getting tougher, not easier, it would have been settled after yesterday's Budget.

After squeezing billions out of the public service to pay for spending promises, Mr English is having to resort to nickel and diming the country back into the black.

Smokers, an easy target, are suddenly whacked with a tax of black budget proportions.

There will be squeals of pain, but the Government will feel safe ignoring it. Smokers have long been in the minority and without the extra $500 million revenue, that elusive surplus – still three years away – would have been pushed out even further.

But this is a Budget where everyone is being asked to share the pain, even if just a little bit – schoolkids with after-school jobs will miss out on a tax refund of up to $240 a year after the Government decided to tax them on income, except for odd jobs such as babysitting where they are paid cash in hand.


Prime Minister John Key says most of the 68,800 school-age children who might be affected will not miss it because they never get around to claiming their refund anyway – but it is hard to paint a raid on pocket money as anything other than petty.

Young families might feel aggrieved about a freeze on funding for early childhood education – but since there will be no immediate pain, the backlash is likely to be muted.

There will be less sympathy for high-income earners whose accountants have exploited other loopholes, such as the $263-a-year nanny tax and housekeeping tax break, or others affecting those who rent out the family bach.

There are small dollops of cash – more money for science and innovation, and a bit of extra spending in health, but none of it is new money – just money raided from elsewhere.

The touchstone for National is to deliver on its promise of getting the books back into surplus by 2014-15 – and in that goal it believes it is keeping faith with the voters, who are just as risk averse and debt averse now as they were four years ago, when the world plunged into recession.

But the current global environment also places constraints on what Mr English can do to get there. If he slashes and burns too much, he risks putting the brakes on an already sluggish recovery.

Mr Key, meanwhile, won't rule out another zero budget if we're buffeted by more global upheaval. The odds of that occurring can't be dismissed.

Some are already questioning whether Treasury's forecasts and view of the world are too optimistic.

So in delivering his fourth Budget, Mr English was between a rock and a hard place. In other words, it's business as usual.

The Dominion Post