Government borrowing $250 million per week

  • Breaking
  • 14/12/2010

By Duncan Garner

Finance Minister Bill English said today he would like to bring us all some Christmas cheer.

But he did not offer any, and there is no sign of it in the newly opened Government books.

Instead, the Government has posted a massive cash deficit, $2.5 billion worse than predicted in the May budget.

“We are on the outer edge of what we would regard as acceptable,” says Mr English.

The cash deficit is the difference between what the Government spends and earns.

And it is now $15.6 billion for the year to next March. It was forecast to be $13.3b.

The Government will run $44 billion in cash deficits over the next five years.

That means the Government is still borrowing $250 million every week to run schools, hospitals, to run the country.

“There will be no spend up in election year, no lolly scramble and no amount of wishful thinking can make that possible,” he says.

The Government has no money because this year it will receive:

- $1.4 billion less tax than forecast, as corporate profits are down and fewer people are working

- $1 billion more will be paid in welfare payments.

- Unemployment will continue to stay at current levels for the next year.

- Growth will stutter along at just under three percent for the next few years.

Mr English says there is not too much to grin about.

“We've got to get into a position to deal with another earthquake and another recession and frankly we won't be there before 2020."

The Government is now looking at fresh cuts to Government spending.

“We're borrowing money to keep people in jobs and in their entitlements - that position can't stay forever,” says Prime Minister John Key.

ACT says massive cuts are needed, and Mr Key won’t do it.

“I don't believe they have the courage to do what's right,” says ACT's finance spokesman, Sir Roger Douglas.

Labour says it is proof the October tax cuts were not affordable.

“They are effectively paying for tax cuts for the wealthy by borrowing,” says Labour leader Phil Goff.

So Mr English departs the stage for 2010, and the signs for 2011 are slightly better - but only just.

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source: newshub archive