WRONG, WRONG, WRONGTreasurer
The National Bank's March Business Outlook makes three claims: Treasury's economic forecasts are overly optimistic, expenditure is not under control and the Government's objectives have been diluted.
"The bank is wrong on all counts," Treasurer Winston Peters said today. First, the National Bank says the Budget Policy Statement used overly optimistic economic forecasts because Treasury did not produce a new set of figures.
"What the BPS said was that new information since the December Economic and Fiscal Update and the Coalition Agreement `did not significantly alter the DEFU forecasts'," Mr Peters said.
"Everyone recognises that forecasting is not an exact science, but taking the Reserve bank's latest forecasts, which are less optimistic than Treasury's and similar to the National Bank's, the fiscal outlook remains strong.
"Even the Reserve Bank predicts surpluses will be at least over 1.5% of gdp in every year."
National Bank's second concern was over expenditure creep.
Mr Peters said the Coalition Government was the first to state as an objective in a BPS that it would keep additional spending within a certain limit - "namely up to $5 billion over three years".
"The National Bank is wrong to say that the spending goals do not cover total spending - all spending policy changes will be included in the $5 billion."
Mr Peters said the Government had been explicit about its expenditure intentions because of the dangers of expenditure creep.
"The fact that we reduced the amount of new spending in the first year to keep within the $5 billion limit showed how determined we were to stay with the self-imposed limits," he said.
Thirdly, the National Bank says the Government's objectives have been greatly diluted.
"That is wrong. This Government has said exactly what it's going to do," Mr Peters said. "Our objectives are different from the last government, but there is no cause for surprise over this because we are a coalition government. What we are doing is being very clear about what the new objectives are.
"Under this Government, expenditure and investment objectives are the key.
"We want to spend more on social services in the high priority areas and keep fiscal restraint.
"Naturally this will lead to lower surpluses and a slower rate of debt repayment."
Mr Peters said the National Bank might disagree with the Government's objectives, but it could not say that they had not been explicitly stated as required by the Fiscal Responsibility Act.