It’s the tale of two budgets.
In Wellington today Bill English screwed the fiscal wallet to the floor, promising to be in the black by 2015, the first country in the developed world (outside Australia) to achieve a post-crash surplus.
In Auckland yesterday Mayor Len Brown passed his $58 billion 10-year spend-a-thon.
Could this be our very own Franco-German divide with Brown playing the role of a pump-priming President Hollande, and Bill English playing the austere Chancellor Merkel?
Brown’s budget contrasts strongly with English’s:
Tax – Brown plans to hit the entire rate-paying base with an overall 3.6 percent increase, plus a one-off $350. English is holding income tax and GST and targeting specific areas of for increase such as fringe benefit loopholes and a stupidity tax on cigarettes. (Those moves by the way will net a $1.4 billion a year, so no small hike).
Asset sales – English added detail about the asset sale plan, hoping to net $5-7 billion which the government is tipping into a ‘Future Investment Fund’. This fund will pay for increasing spend on schools and hospitals. Brown is staunchly against asset sales.
Infrastructure – Brown’s budget will spend up large on physical infrastructure: the $2.86 billion inner-city rail loop, a $18.6 million super yacht facility in Wynyard Wharf, trams joining Wynyard to the city, and a $16 million waterfront theatre. English is spending smallish amounts on maintaining the infrastructure, such as schools ($33.8 million), hospitals ($88 million ) and KiwiRail ($250 million). The only exception is $76 million of capital expenditure on the reformed IRL, to be called the Advanced Technology Institute. This will also include a $90 million operating fund.
Language – English says his approach is ‘sensible’, ‘fiscally disciplined’ for ‘volatile’ times. Brown’s budget is ‘seriously progressing … stakes in the ground.’
The two budgets signal the emerging divide between right and left and foreshadow how the next general election will be fought: dries versus wet, pump versus austerity, English versus Brown. Watch that space.