One big number is likely to stand out of this Thursday’s Budget.

That will be a huge forecast Government surplus for sometime in the next Parliamentary term.

Mr English has been recently addressing each of National’s regional conferences and in those speeches he has talked about “better than expected” macro numbers featuring in the Budget.

Ten days ago he told his party’s southern regional conference in Wanaka o that in “two or three years” the Government would be recording a five billion dollar surplus.

“New Zealand has done a pretty good job of getting us back to surplus,” he said.

“And now the surpluses kind of look like they are locked in.

“So now the political landscape is rising surpluses.

“So we can’t run the argument that there is no money because I will be showing numbers in the Budget, which show two or three years out, five billion dollar surpluses.

“So we are not going to be able to say there is no money.”

Just what he means by “two or three years” was not defined any more tightly but what it is likely that he is referring to either the 2018 or 2019 Budget.


The half-yearly fiscal update published last December forecast a $3.1 billion surplus for the 2018/19 fiscal year.

That would suggest the $5 billion figure would be more likely to fall in the 2019/20 year and one source familiar with Budget preparations told POLITIK that this might be the case.

If that is so, then the Government could confidently promise the $3 billion in tax cuts the Prime Minister has been talking about.

In Parliament yesterday, answering questions from Labour’s Grant Robertson, he appeared to be offering similar hints.

“Due to the hard work of the Public Service, the members of the various coalition Governments, and the New Zealand public, this Budget will indicate that New Zealand has choices out ahead of us that very few other developed countries have,” he said.

“They simply will not have choices because their public finances are not yet in a sustainable position—ours are.”

Mr English said that National would have to compete with its opponents over the question of the surpluses and would need to argue that it could do a better job with the money.

On Monday, after he made those statements, the Prime Minister said: “The point is if we’re going to have a tax programme – we’re not ruling that out in for 2017 or campaigning on it for a fourth term. But having probably a bigger one, to be blunt.”

When asked how much was needed for a meaningful tax cut, Key responded: “$3 billion I reckon.”

What that suggests is that National would campaign in 2017 with a more specific tax cut programme presumably being put in place for the 2019/20 fiscal year.

However there is some criticism of the Government’s forecasts with Westpac economist Michael Gordon arguing that they are “very optimistic.”

“So we are sceptical that the large surpluses that the Treasury is projecting towards the end of this decade will eventuate,” he said in a Budget preview last Friday.

The prospect of being able to firmly promise tax cuts during the next campaign will be tempting for National, particularly with Labour possibly proposing to raise some taxes or introduce new ones.

Though polling continues to show National well ahead of Labour, there is a nervousness within National about the nxt election, particularly the possibly that Winston Peters could hold the balance of power.

National would prefer that he didn’t and a promise of tax cuts might be a way of avoiding that.