2 May 2021

Prepping for Budget 2021 at Parliament

From The House , 7:30 am on 2 May 2021

The full details of Budget 2021 will be announced on 20 May but the process actually starts much earlier.

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Minister of Finance Grant Robertson is in charge of Budget 2021. Photo: VNP / Daniela Maoate-Cox

May is budget month at Parliament when the government reveals its plan for spending the country’s money over the next financial year. 

But the planning started well before now. Parliament looks at government spending past, present, and future, in a continuous financial scrutiny cycle that takes about two and a half years.

Every Budget cycle the government releases a Budget Policy Statement (BPS) between December and March - which gives a preview of the priorities that will guide its budget decisions. 

The priorities of the BPS are: 

  • continuing the Covid-19 response

  • delivering priority and time-sensitive manifesto commitments

  • supporting core public services through managing critical cost pressures

  • continuing to deliver on existing investments.

In recent years the word "wellbeing" has been mentioned a lot when MPs discuss the budget - since 2019 budgets have been guided by Treasury's living standards framework which aims to measure not just the cost of a policy but its value.

Lifting living standards means balancing investment in the resources that create better lives or what Treasury calls, the four capitals: Natural, social, financial and physical, and human.

Natural - this is the environment like clean water, breathable air, or fish and also includes oil and gas.

Social capital - how we relate to one another as citizens including the trust we have in institutions like the police, and the faith we have in agreements like employment contracts

Financial and physical - the hard money stuff including individual things like homes and cars and community things like roads and hospitals. It also includes financial assets that could buy these things.

Human capital - skills and qualifications people have that means they can be productive citizens but also includes the country’s health and education systems.

Keeping in line with the living standards framework the BPS has five wellbeing objectives:

  • Supporting the transition to a climate-resilient, sustainable and low-emissions economy while building back from Covid-19
  • Enabling all New Zealanders and New Zealand businesses to benefit from new technologies and lift productivity and wages through innovation, and support into employment those most affected by Covid-19, including women and young people
  • Lifting Māori and Pacific incomes, skills and opportunities, and combating the impacts of Covid-19
  • Child Wellbeing – Reducing child poverty and improving child wellbeing
  • Physical and Mental Wellbeing – Supporting improved health outcomes for all New Zealanders and keeping Covid-19 out of our communities.

The BPS is examined by Parliament in a couple of ways.  

Panel of MPs

The BPS is sent to the Finance and Expenditure Committee for a closer look. The committee is made up of Labour, National, Green, and ACT MPs and their job, like other parliamentary committees, is to look more closely at legislation, petitions, conduct inquiries, and hear from submitters. 

If the committee likes, it can ask Treasury and the Minister of Finance to turn up for a public hearing. 

It’s common for a hearing to start with a briefing from the submitter followed by questions from the MPs on the committee. MPs from parties in government tend to ask softer questions while opposition MPs will ask harder questions and try to expose flaws in the government's plan. 

The full hearing with Treasury and the Minister of Finance Grant Robertson can be watched here. 

Live streams of submitters talking to the committee can be watched here and here

The committee had 58 submissions and it compiles these along with advice from officials and experts into its report on the Budget Policy Statement. 

That report becomes the subject of a debate in the House by the rest of the MPs.

Robust debate

This debate is led by the chair of the Finance and Expenditure Committee who has to talk from their position as a parliamentary committee chair rather than a party member. 

Fifteen speeches were given in total from MPs in the House and while it’s the job of all MPs to hold the government to account for its decisions and actions, the more critical voices can be heard across the chamber from the Opposition MPs. 

The government's plans for housing, responding to Covid-19, supporting Māori, and plans to address the effects of climate change all came under fire in the two-hour debate. 

 But ultimately the debate's purposes is to decide whether or not the House agrees to take note of the Finance and Expenditure Committee's report on the BPS. 

So while this is not an opportunity to defeat the budget, or overthrow the government, or change any of the proposed spending, it is a chance for MPs to publicly voice their opinions on the government's intentions for the country's funds and force the government to respond in a public setting for voters to see and hear. 

The full BPS debate can be read here.