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16/5/2018 — Economics, Politics and Government
Budget: Great Expectations likely to disappoint
By Dene Mackenzie

Budget 2018 could realistically be called “Great Expectations,” expectations that seem likely to be dashed for many supporters of the Labour and Green parties.

Finance Minister Grant Robertson will present his first Budget to Parliament at 2 pm tomorrow.

New Zealand First is the big winner from the pre-Budget announcements. Deputy Prime Minister Winston Peters has nearly $1 billion to spend on upgrading embassies and strengthening ties with New Zealand's Pacific neighbours.

Forestry, Infrastructure and Regional Economic Development Minister Shane Jones has $1 B a year for three years to spend on kick-starting regional economies. Plus, Jones has one billion trees to plant.

The Greens will suffer the most from a lack of policy funding in today's Budget. Green supporters could be forgiven for looking back with regret at the money allocated by National in previous Budgets.

Unions, teachers, nurses and midwives are crying out for more funding for their special areas of need. Farmers wanting compensation for having their dairy herds infected with Mycoplasma Bovis are also seeking money from the Budget, an area likely to have found late favour with Robertson.

There is always a major difference in the way the public views Labour versus National Budgets. Labour is expected to spend on social services, such as health, housing and welfare. National is expected to lean towards tax cuts, helping people to find jobs and to be less reliant on government help.

However, those lines have become blurred in recent years with National continuing with Working for Families and belatedly realising there was an housing shortage and an accommodation shortage for the homeless.

Labour is now signing up to international trade agreements and is looking more business-like, despite bowing to union demands on workplace relations.

The Public Service Association, the union for public servants, is calling for the Government to urgently relax its Budget Responsibilities Rules to tackle the $2.7 B hole it claims to have found in the health budget.

Analysis by the Council of Trade Unions and the Association of Salaried Medical Specialists claimed to show the Government would need to spend $2.7 B to restore services to the level they were in 2010 and fund new initiatives.

Health Minister David Clark has found $1 B of underfunding from the previous government's health expenditure and Education Minister Chris Hipkins had found $1 B of underfunding in education. National increased spending in those areas, just not as much as Labour said it should.

Robertson has been watering down hopes for a large spend-up in his Budget and Dr Clark has played the role of telling his colleagues to rethink how they want their money spent.

Robertson has been totally clear he will not bend his BRRs and though he has nearly $1 B extra money to spend, spending it all in one go would be irresponsible, he acknowledged.

The areas most likely to be front and centre of the first “wellbeing” Budget today are: health spending, education funding, some new housing initiatives, despite Housing Minister Phil Twyford being actively announcing policy pre-Budget, and social help for those in need.

The first months of the Government have been marked by the establishment of more than 100 working parties or reviews. After nine years in Opposition, Labour could have been expected to have worked quickly to bring in policies of importance instead of tinkering at the edges.

Though New Zealand does not have a heavily unionised workforce, there have been great expectations for more help for workers since the September election. Those expectations and hopes are unlikely to be met today.

*Dene Mackenzie is business editor of the Otago Daily Times.

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Grant Robertson