New Zealand Finance Minister Grant Robertson is in a prime position to launch his much vaunted Wellbeing Budget next year following publication yesterday of the December fiscal update.
The Treasury figures contained in the December Budget Policy Statement showed the operating balance excluding gains and losses (obegal) is set to fall to $1.7 billion in the current June 30 financial year, from $5.5 billion in 2018, because of extra spending contained in Budget 2018.
However, the obegal is expected to rise to $8.4 B in 2023, or 2.3% of gross domestic product.
Robertson says the ongoing surpluses will help ensure net core Crown debt reduces to 19% of GDP in 2022, well within the target set in the Budget Responsibility Rules.
The half-year budget update confirms operating allowances of $2.4 B per year in Budgets 2019 to 2022. It introduces a multi-year capital allowance which has been set at $13.1 B.
Major investments will continue to be made in housing, health, education and infrastructure to address the social and infrastructure deficits emerging in NZ, he said.
What is becoming obvious, is Labour will be able to spend its way to another term in office if it can get key policy of KiwiBuild under control. The houses which have been built are not being bought by first home owners as they too expensive.
If Robertson can find a way to get the programme back on track, Labour is set to lead the next two governments, with money to burn.
The Wellbeing Budgets, which start next year, is helping the Government identifying the actions it believes will make the greatest contribution to improving the intergenerational wellbeing of New Zealanders, Robertson said.
The half-year update was light on detail, something latched upon by the New Zealand Taxpayers Union.
Economist Joe Ascroft said analysing policies through a wellbeing lens will be incredibly difficult.
Measuring the value and effect of any impact on wellbeing and assessing how it should trade those outcomes off against economic growth will require a series of complicated subjective value judgements.
The Government highlighted loneliness as a wellbeing problem. Designing a policy intervention will require the Government to decide how much loneliness matters to different people, the effect of the intervention on loneliness, and any relevant costs to taxpayer and economic growth, he said.
“Ironically, while the BPS acknowledges we largely have a healthy environment and good education and healthcare outcomes, our biggest challenge for wellbeing appears to be poor productivity growth.”
The Government is widely expected to introduce a Capital Gains Tax if it wins power in the 2020 election.
Ashcroft said as the Government’s obegal is expected to grow to $8.4 B by 2023, the Government should campaign on tax cuts at the 2020 election, not a Capital Gains Tax.
Robertson says he has identified five priorities for Budget 2019:
• Creating opportunities for productive businesses, regions, iwi and others to shift to a sustainable and low-emissions economy.
• Supporting a thriving nation in the digital age through innovation, social and economic opportunities.
• Lifting Maori and Pacific incomes, skills and opportunities.
• Reducing child poverty and improving child wellbeing, including addressing family violence.
• Supporting mental wellbeing for all New Zealanders, with a special focus on those aged 24 and below.
Reducing child poverty has a special meaning for Prime Minister Jacinda Ardern.
During the leaders’ debates of 2017, she promised to give an annual statement on the number of children who had been lifted out of poverty.
Budget 2019 will be the first chance for Ardern to tell Kiwis how many of their children now live above the poverty line – wherever that line is drawn.
*Dene Mackenzie is a Dunedin political commentator.