English more like Santa than Scrooge

HAMISH RUTHERFORD
Last updated 06:20 18/12/2013

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Bill English would make an unlikely Santa Claus, but the man who has more power to dish out presents than any other - but never does - is finally willing to spread some festive cheer.

OPINION: After years of talking down the economy, telling households that their debts are too high and generally complaining about the finances he inherited, the finance minister is not yet asking the country for a wishlist, but is at least gently permitting others to enjoy their own.

Yesterday's half-year update suggests that while the Government's key political target of a return to surplus in 2015 is still a hostage to rounding errors, the longer term picture is much brighter.

Having spent years grinding away, with households getting control of debt and coping with wages growing at barely the rate of inflation, New Zealand faces the prospect of falling unemployment and an increase in the rate of real wage growth.

The economy is poised to grow faster than almost any advanced country in the world in 2015, with surplus set to rise into the billions, bringing debt back under control.

"Why shouldn't they have a bit of confidence?" English said of households yesterday.

Why indeed? After five years of being told to tighten their belts, voters are probably getting sick of feeling miserable. With interest rate increases apparently inevitable, and a clearer picture emerging of a government running large surpluses, they might be tempted to turn to parties promising to share the bounty around.

The task for English is to make sure voters feel good before the election, and to associate some of the improvement with his government.

With real wage growth expected to be about 1 per cent a year in the next few years, and unemployment still above 6 per cent, English may need to work hard to convince us how good things are.

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