In an unusual move, Treasury Secretary John Whitehead invited an eclectic mix of journalists, Government heads, the Reserve Bank Governor, and business representatives to Christmas drinks. But before the festivities began Whilehead forced the audience to listen to his carefully prepared views (with Powerpoint accompaniment) on fiscal policy choices.
Whitehead signalled that, largely for demographic reasons, the days of large Government surpluses are likely to be over, so more care needs to taken than in recent years on how Government money is to be invested and spent.
In summary he advocated the need for continuing surpluses, but at lower levels than in recent years (changes in spending and taxes should be targeted in particular at supporting growth - ie lower taxes); improved value for money in public sector expenditure; investment increasingly focuses on high quality infrastructure spend (ie investment in those things that are going to help grow the economy on contrast to investment in assets associated with social policy objectives).
The message was clear, there is no room for a lolly scramble in election year, and more policy such as free money for students would not be wise.
We hope that the Minister of Finance has a good read.
