Smoke and mirrors over surplus

It's the case of the vanishing surplus and an example of the politics of words. The term "surplus" has been quietly dropped from Treasury press releases on the Government's monthly financial statements in the past two months.

And a key table of fiscal indicators has been rearranged in all the monthly statements this year to place the Government's cash position at the top, displacing the operating balance - the surplus figure.

The reason appears to be the Government's desire for journalists and the public to concentrate not on its embarrassment of riches but a lower figure - the cash surplus which is $1.775 billion for the seven months.

Finance Minister Michael Cullen has voiced increasing concern that portraying huge surpluses has unrealistically built up expectations. National and Act have hammered away on the surplus, saying it shows the Government can afford tax cuts.

Last month, Dr Cullen said the May Budget would provide "greater clarity" on the cash position.

"After a five-year struggle, I am about to give up as lost the effort to educate the media on one of the basic questions of third-form accounting: what is cash?"

The operating balance created the "illusion" of spending options that did not actually exist, he said.

As if to reinforce that, Dr Cullen's press release accompanying the financial statements yesterday did not even mention the $5.273 billion surplus, concentrating instead on the cash position.

But rearranging the table and the dropping the word "surplus" has been jumped on by opposition MPs.

Act leader Rodney Hide accused Dr Cullen of forcing the Treasury to bury the operating balance figure and instead highlight the cash figure in an attempt to show that Labour had no money for tax cuts.

"The shape of the Crown statements proves Labour has got the public service playing ball with their deception; now they are hoping they can pull the wool over the media's eyes."

National finance spokesman John Key said Dr Cullen was terrified of the public finding out the truth.

"That would leave him no option but to either admit he is hogging the benefits of economic growth or return some to those who rightfully earned it."

But Dr Cullen's spokeswoman said the Government had expanded the level of fiscal reporting, including introducing oberac (operating balance before revaluations and accounting changes) as a new measure in its first term.

"We are trying to get a more realistic view of the Government accounts than you hear casually on talkback radio."