National has tried to get the bad deficit news out of the way before this year's Budget but Treasury’s warned next year’s books could also be in the red despite Bill English's panicked spending cuts late last year, Labour’s Finance spokesperson Grant Robertson says.
“Papers released by Treasury under the Official Information Act show last December's provisional forecasts for the half yearly update (HYEFU) predicted a $1 billion deficit for this year and a $100 million deficit for next year as well.
“Bill English realised National’s economic credibility would be in tatters if those figures were published in the HYEFU so he slashed his spending allowance by $500 million a year to get the 2015/16 books in the black.
“However, the Treasury report states that even with the cuts, the books will only return to the black ‘assuming dairy prices rebound as currently forecast’.
“But with dairy prices continuing to fall today – leaving a $7 billion hole in the economy – the Government’s surplus strategy of constantly pushing out spending until tomorrow won’t be enough.
“The Government cannot rely on fiddling with spending and hoping that milk prices stop falling to get back into surplus. It needs to generate revenue.
“It’s time National came up with a better plan for boosting business and creating jobs to generate the revenue the country needs to get back in the black,” Grant Robertson says.