John Armstrong: Quixotic English like dog with bone

Finance Minister Bill English

Stubborn? Bill English? You can say that again. "Stubborn" is probably too weak a word to describe the Finance Minister's increasingly quixotic-looking quest for surplus in the current financial year.

The finance minister argues a return to surplus is still "achievable" this year despite the latest Treasury forecasts being more pessimistic than was the case with those in the pre-election fiscal update which was issued in August.

In four short months a projected surplus of $297 million has turned into a $572 million forecast deficit.

But whereas Treasury is saying no to the likelihood of surplus, English is saying never say never. English is like a dog with a bone. He will just will not let go. The puzzle is why?

The answer is that getting back into surplus has become the measure of National's overall economic management. Failure to reach surplus has wider connotations..

The 2011 decision to set a target of surplus by the end of 2014-15 has served really its purpose, however, at least in political terms.

English looked to have got close enough to surplus before September's election for most people to be satisfied National was capable of balancing the books even if it took a little longer than the target date.

English is unnecessarily putting his credibility on the line in the first year of the election cycle seemingly just to prove a point.

If his "achievable" target is not met, he will have egg on his face. He is gambling, however, on the forecast being wrong and the final accounts being more positive in terms of revenue windfall, as has been the case in past years.

The search for surplus is a bit like mirages in the desert. The Treasury forecasts tend to project big surpluses three or four years out, But when that point is reached, the forecast surpluses have disappeared and been replaced by further mirages in the distance.

As English himself has noted, when the target of surplus was set in 2011, the Treasury was forecasting the Government's books would be in the black to the tune of $1.3 billion by July next year - not in deficit.

In English's mind, the target seems to have become a promise - one that he feels obliged to keep. Which is even more puzzling. We will not know whether he has kept his "promise" until October next year when the final figures for the 2014-15 year are tallied - by which time the matter will be of little more than minor academic interest.

Read the full Treasury report here: