Some commentators have been quick to jump on today's announcement of a fall in the Government's operating surplus as a reason for cancelling or reducing the size of proposed tax cuts. This is rubbish. Paula Oliver of the NZ Herald agrees. She explains why:
Instead, they should look at the underlying amount of money he has, what used to be called the OBERAC, and is now called the OBEGAL - a measure which excludes the unrealised gains and losses of something like the Cullen fund.
Over the years Dr Cullen has been notorious for running large surpluses, but it is easy to forget that those surpluses were actually boosted by the good returns the super fund was raking in.
It was only a matter of time before the fund didn't fare as well because of a downturn on global markets.
Dr Cullen might feel a bit of an "I told you so" moment coming on as he notes that the OBEGAL figure released today is bang on forecast at $2.529 billion - meaning in his eyes he has just as much money to spend this election year as he did before the operating surplus fell short of forecast.
