Last week's Treasury figures were very bad indeed. I still haven't wrapped my head around how forecasts of a decade of deficits are consistent with the Fiscal Responsibility Act, but neither did I ever wrap my head around how the RBNZ's interest rate policies back in 2005-2006 were consistent with the Policy Targets Agreement.
Just how terrible are the numbers? The deficit's at $2500 per capita or, somewhat terrifyingly, about $4500 per member of the work force. $2500 per capita doesn't mean much as lots of those capitas aren't ever planning on joining the workforce to pay the bill. Recall that average income from all sources for someone in paid employment is $930 per week. So the government, this year, has taken on debt equivalent to a little more than a month's earnings for each and every member of the labour force. Let's hope the upcoming budget has some serious rolling back of new entitlement spending brought in under the prior government.
The only bright points in the government's books, where tax revenues from almost all sources dropped considerably, came from reasonably large increases in alcohol and tobacco excise tax revenues. Total alcohol excise taxes increased from $795 million to $829 million while tobacco increased from $963 million to $1,063 million. ACC's earnings also went up, but of course their main problem is on the spending side. Congrats Treasury (Sam Direen!) on listing excise equivalent duties split out by category in the main figures rather than burying them with all other duties as was prior practice.
So Kiwis owe a debt to the drinkers and the smokers for keeping the deficit from being even worse than it is. Recall of course that tobacco tax revenues far exceed health care costs while alcohol tax revenues are greater than fiscal costs to the government (health) and roughly match overall "social costs."
In related news, Luke Nicholas of Epic Beer reports on a survey for the Brewers' Guild showing craft bottled beer sales up ten percent (with Epic being up 200%), despite indications that one of the mass market brands, DB, is seeing shrinking sales.
