Treasury: Effects of recession could last 15 years from TV3 News 25 Feb 2009 Treasury officials believe the current recession could affect us for 15 years. Finance minister Bill English has called for Government department heads to cut spending, and has joined John Key in hinting that the New Zealand superannuation fund may be tampered with to find extra dollars. "Treasury has produced deficits and growing debt for 15 years, and as I have said, that is unacceptable for us," says Mr English. In the last week English summonsed more than 30 Government department heads to the Beehive with the message to cut back and get real. "I want to dispel any notion that CEOs may have had that this will blow over, as some of them said to me," he says. "It won't blow over." The Government needs money, and it is looking at stopping or cutting back the $2 billion it puts away every year into the Superfund to pay for the future costs of national superannuation. Mr English has until now been silent on the issue. Every dollar the Government currently saves in the $12 billion fund is borrowed money, and the fund is losing money big time. "We have to look at whether we're happy to have $5.5 billion of losses," says Mr English. "It actually wipes out two years of contributions." Labour set up the scheme, nicknamed 'the Cullen Fund'. Labour leader Phil Goff is urging National not to touch it. National says entitlements to superannuation won't change, but Labour is sceptical. National is also refusing to put its tax cuts on hold, despite some saying only the rich benefit and it is the poor who need them. "We are committed to going ahead with the April 1 tax cuts," says Mr English. Mr English is a man under pressure, and given the outlook, it won't ease for sometime.See also:
Thursday, 26 February 2009
The contradiction between all the talk of “economic stimulus” and the realities of declining tax revenue in a recession hits home. Bill English, National's finance minister, is actually preparing to slash government spending – but the rich can have their tax cuts. What will this mean for the provision of education, health and welfare services? How long before the National government is deeply unpopular? And what will the alternative be? And hasn’t gambling the future retirement income of workers on the world’s sharemarkets been a disaster. What remains of the SuperFund should be brought back immediately to NZ and invested in sustainable and socially beneficial enterprises.