10 Oct 2018

'We've got the opportunity' - Greens expect big spend after surplus

11:12 am on 10 October 2018

What's the point in a $5.5 billion surplus if there's still people living in cars and garages?

That's the question Green Party co-leader James Shaw is asking Finance Minister Grant Robertson after the government books revealed a much higher than forecast cash surplus yesterday.

Green Party co-leader James Shaw answers media questions

Greens co-leader James Shaw is expecting significant social, environmental and infrastructure spending. Photo: VNP / Phil Smith

But the business lobby says the accounts are just what's needed to boost confidence.

Mr Robertson has been at pains to tell people the government is not awash with cash following the announcement of a $5.5 billion surplus - up $2.4 billion on the Budget predictions in May.

But his ministerial colleague is not so convinced and wants to see more spending - although he won't say exactly how much.

"What point is kind of a $5 billion dollar surplus if you've still got people living in cars and garages, right?" Mr Shaw said.

Mr Shaw was expecting significant social, environmental and infrastructure spending in next year's Budget, given the government had fallen well within the Budget Responsibility constraints it set itself when the coalition was formed a year ago.

He said teachers and nurses wages were contributing to the social deficits the country was facing and holding their incomes down led to shortages and that "starts to tear at the social fabric".

In short, he said, if you've got the money you ought to spend it.

"I would argue that actually we were elected as a government to solve some of those really endemic poverty issues, to fix the housing crisis, to clean up our water, to fix transport, and so on. We've got the opportunity to do that - we should allow ourselves to do that,'' he said.

Mr Robertson described the surplus as a balancing act between having the money to invest in roads, schools and hospitals while also being mindful of rainy days.

"We remain a small open economy more susceptible to the economic challenges provided by the rest of the world and the natural environment challenges provided by the planet than other countries," he said.

"It is important to me that we continue to manage our accounts in such a way that we are resilient.''

He told Morning Report last year was a good year for the coffers but more expenditure was expected.

The government was already putting millions of dollars into addressing homelessness, he said, including in transitional housing and supporting the Housing First programme, and had put a half-billion dollar offer on the table for teachers' pay.

"The government's got an ambitious programme in health, housing, education, transport ... We balance that against making sure we've got a buffer, and I think we've got that buffer about right."

Kirk Hope from Business NZ said that was the right message of reducing debt while still spending on the essentials for growth.

He liked how the accounts and government spending was shaping up and thought the rest of the business community would too.

"Given the government's continued commitment to meeting the debt reduction targets, which they've already done, and some of the spending. Those things are really going to contribute to improving business confidence,'' he said.

Employers and Manufacturers Association chief executive Kim Campbell told Morning Report the Finance Minister "should not blink" in the face of pressure to loosen the strings on government spending.

The goverment was wise not to go on a spending spree, Mr Campbell said.

The economy was doing quite strongly, he said, but uncertainty about industrial legislation and oil and gas exploration was weighing on business confidence.

Mr Campbell said petrol prices should also not be ignored, and the government should consider temporary tax relief until product costs fall.

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