21 May 2022

A Budget searching for balance

From Focus on Politics, 10:00 am on 21 May 2022

"The here and now matters, but so too does tomorrow" - Finance Minister Grant Robertson

The government has become used to crisis Budgets after two years of grappling with Covid-19, but 2022 has seen a new crisis rear its head - the cost of living - and it may yet prove a tougher beast to tame.

Finance Minister Grant Robertson had billed Thursday's Budget as one focused on long-term security - chiefly health and climate change - but the recent months of red-hot inflation meant he knew he had to look to the short-term too. 

The trick was how to deliver some immediate relief to New Zealanders while not inadvertently making the crisis worse. This, then, was a Budget in search of balance.

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At the core is the $1 billion cost-of-living package, a naked appeal to middle New Zealanders not already receiving support from the government but still feeling the pinch, expected to number more than two million people.

The lion's share goes to a one-off $350 sweetener for those who earned under $70,000 last year - but not for beneficiaries of the Winter Energy Payment.

Road user charges, fuel excise cuts and half-price public transport were also extended another two months, the latter made permanent for those with a Community Services Card. 

Treasury was critical of a lack of attention to New Zealand's poorest, suggesting a more targeted form of support and warning the payment could add to inflation. 

National leader Christopher Luxon was quick to dismiss the payment as a token gesture and bandaid solution, labelling it the government's "backwards Budget". 

ACT's David Seymour was even more scathing, saying those on middle incomes had been shafted, while the Greens and Māori Party feared it was those most in need being left behind. 

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Health may have grabbed fewer headlines, but the whopping $11.1b boost to the sector is the long-lasting medicine to go with Robertson's spoonful of sugar.

Some $1.8b to wipe away 13 years of deficits here, another $1.8b for the new Health NZ there, $1.3b for hospital revamps, and a sprinkling of $168m for hauora commissioning from the new Māori Health Authority. 

Pharmac gets a $191m bump, air and ground ambulance services together pick up over $256m, and disability services get nearly $1b including funding for a new ministry. 

Climate spending - the other main priority - had largely been dealt with on Monday with the release of the Emissions Reduction Plan, a $2.9b spending spree on climate projects funded through the Emissions Trading Scheme (ETS), efforts to achieve the reductions set out in the emissions budgets revealed a week earlier. 

The plan is nearly 300 pages long and includes about as many actions, but the centrepiece was transport: A scrap-and-replace scheme for gas guzzlers, $350m for cycleways and bus shelters. 

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Environmentalists were underwhelmed, however, with about $340m splashed on a new agritech centre, despite nothing to bring farmers into emissions pricing until 2025. Climate Minister James Shaw said the plan would have been more ambitious if the Greens were in charge. 

The right was also critical: ACT denouncing the plan as social engineering and political theatre, National decrying 'corporate welfare' and a lack of detail. 

Indeed, more than half of actions listed could more accurately be described as ambitions: plans to investigate plans.

The past few years have highlighted the uncertain nature of the world. The question is: what crisis will next year bring, and will this year's hefty bill really fund the transformation the government has promised for so long. 

In today's Focus on Politics podcast Deputy Political Editor Craig McCulloch runs the numbers on the Budget and its political implications. 

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