Govt signals another austerity budget

Posted By TEU on Apr 5, 2012 |

The minister of finance, Bill English, announced this week that he will spend $800 million less in this year’s budgetthan the Prime Minister John Key was forecasting only six weeks ago.

That could be ominous for tertiary education come next month’s budget warns TEU national president Dr Sandra Grey.

“Before this austerity announcement Treasury was already forecasting the government to spend $80 million less on tertiary education next year and to fund nearly 2,000 fewer students,” said Dr Grey. “If tertiary education bears its portion of this $800 million cut that could amount to further cuts of about $30 million – potentially the salaries of hundreds of staff helping to educate thousands of students.”

CTU economist Bill Rosenberg says the government is pursuing its budget surplus target for 2014/15 at all costs.

“There is nothing in the February accounts that justifies this major turnaround since the Prime Minister’s statement barely six weeks ago that the May Budget would include an $800 million allowance for new spending unless ‘we really saw a catastrophic meltdown in Europe’. There has been no catastrophic meltdown.”
Radio NZ News clip
“The February accounts are slightly better than January, but still show the government’s strategy of cutting taxes on high incomes and raising GST has not paid off. Income tax and GST revenue are still $825 million below even revised lower forecasts because people’s incomes are not rising as fast as expected by the government,” said Dr Rosenberg.

“The cuts in government expenditure are acting as further brakes on the economy which is stagnating as a result of weak demand. Further cuts will simply prolong the time before a real recovery takes place. The Christchurch rebuild has been repeatedly delayed and may not assist the rest of the economy sufficiently to reduce unemployment and stimulate activity outside a few construction-related industries and Canterbury itself. It’s time for a change in strategy,” Dr Rosenberg said.

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