Thursday, May 19, 2005

The budget

Well it's budget time, and what do I get? A little over 67 cents a week - in three years time. All eaten up by inflation, no doubt.

The deluge of ministerial statements has hit my in-box again. I have to revise my original prediction of an election from July 30 to mid-September.

The Government has said it is committed to low income earners - hence working for families, but if you want to be in on the governments housing for first home buyers you must be earning at least the average wage - $41,000 - to service the mortgage. This means NOBODY in the lowest two tax brackets will be eligible for this scheme -unless they don’t spend much ( ie: save more) or have another friend they can pitch in with. More people are getting an income below the average wage than those above it. Such families -presumably with kids - will have to pay at least $23.00 a week for five years and, with a government -funded $1000, would still have less than $8000 as a deposit. Buy a house and it goes up to $12,000, but how on earth will they service the mortgage and pay off their student loans?

Of course, if they waited 40 years they will have $120,000 to put towards their first home, except it will be a retirement home, and they`ll be dead before half the mortgage is paid off.

And as for the tax cuts -so much for 5 percent of workers being in the top tax bracket as Labour pledged before 1999. Someone just over the average wage will benefit by just $6.00 per week - but they will have to wait until 2008 when the combined increase in tax, beer, cigarettes - and of course inflation - will be greater than that six dollars. Someone on my tax scale will be able to buy a packet of chewing gum each week - assuming , of course, that the price of chewing gum doesn't go up before April 1 2008, and inflation doesn’t chew up the increase.

Household savings are among the lowest in the OECD, but I bet that’s not the case with the percentage of GDP that is spent by the Government.

Also the current government is clearly committed to spending in areas it has no mandate to be involved in like a new business web portal ($9.9 million over four years).

Interesting that the police budget is increasing by 73.6 million but the World Cup bid, if successful is estimated to cost $70 million. What's more important, cops on our streets or foreigners in our stadiums? We need 2500 more police on our streets to even equal Australia's police per head of population - yet we are not even getting half that over three years. That's not taking into account any population increase.

No wonder 600 Kiwis are moving to live in Australia every week.

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