Surplus surprise likely to be short-lived

A blip on the Government’s operating balance today is likely to be short-lived and smart, green investment should be considered to kick-start a faltering economy, the Green Party said today.

Treasury reported that the Government has recorded an operating balance before gains and losses (OBEGAL) surplus of $1.2 billion in the first eleven months of the financial year that ended last week.

“The good news of a government surplus is likely to be short-lived and Treasury’s downside forecasts for the economy are looking increasingly more likely,” Green Party Co-leader Metiria Turei said.

“This is a short-term fiscal result linked to the Government’s short-term thinking, but the medium-to-long-term economic outlook is less rosy.

“Declining business confidence, collapsing dairy prices, stagnant wages, and the possible slow-down of the Chinese economy mean the Government may soon need to start spending again to avoid a recession.

“If this is the case, National should invest in high-value infrastructure with multiple, long-term benefits.

“Instead of spending on low-value roads, the Government can move forward spending on Auckland’s City Rail Link – the number one transport priority for Auckland and a project that will employ hundreds and help reduce Auckland’s climate emissions from transport.

“The Government can also help schools reduce their own power bills by investing $20 million into solar power systems in schools, allowing them to benefit from cheaper, cleaner power, leaving them with more money to invest directly into teaching and learning.

“Finally, the Government can create and invest capital in the Green Investment Bank. Such a bank would be a government-owned, for-profit bank that would partner with the private sector to speed the funding of new climate-protecting projects, ranging from renewable energy and biofuel production to new clean technologies.

“The National Government can be more ambitious for New Zealand, using the climate and economic challenges we face to begin our transformation towards a low carbon economy.”

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