Budget 2022 does little to stop New Zealand from 'going backwards'

8:42 pm on 19 May 2022

By Brigitte Morten*

Analysis - Despite the lack of wings, it is hard not to think that Grant Robertson sees himself today as the fairy godmother of middle New Zealand.

A little bit of dental spending for you, half-price public transport for you and a small business investment programme for you.

Grant Robertson Photo: RNZ / Angus Dreaver

Back in October, when Budget initiatives would have first gone to ministers, the government would have been flying high on a successful round one of Covid-19, a vaccination programme that they thought would avoid the vast majority of us getting it, and most importantly despite locking Auckland down, the polls were barely shifting.

So if there was a chance to spend big, and get that wish list funded, this was it. The question is what got pushed aside from those October wishlists to make room for the cost of living splash the Labour government needed to address downward trending polls.

There are remnants of what they may have hoped from such a big spend - $200 million for light rail in Auckland and new harbour feasibility studies. And the survival of programmes that would have passed the Bill English social investment approach like increasing low-income support for emergency dental care and the introduction of the education equity system.

But it is clear there has been a trade-off between Labour's traditional base and those swing voters from 2020 that they are desperately trying to hold on to.

Other than dental care, the vast majority of low-income earners got little from the Budget. They do not qualify for the new payments, and there is little that will give them relief from increased rent prices.

And on climate initiatives, the Green Party made it clear earlier in the week with the release of the Emissions Reduction Budget that they wanted more.

And just like the fairy godmother in Cinderella whose wishes granted ran out at midnight, many of the minister of finance's grants also have an end date.

The $350 payment for the squeezed middle is a one-off. Supposedly timed for August for when they forecast wage growth will be outstripped again by inflation growth - as if people's fortnightly wage packets go up with the same volatility as the price of a block of cheese.

The extension to half-price public transport fees and fuel tax cut will drop off in August, with the $350 payment to follow in a couple of months. For some, this will feel like dropping off a cost of living cliff just before Christmas.

And even the prime minister has admitted the cost of living relief is 'not perfect' but 'timely'.

Claiming the biggest health spend ever is largely redundant when the vast majority of it goes, as predicted, on dealing with DHB deficits and cost pressures.

This means to get ahead, a large portion of next year's spending envelope will have to go on health initiatives. For now, people cannot expect their Covid-19 delayed health treatment any earlier as a result of today's spend.

The government clearly had National's successful cost of living fight in its sights when they made these last-minute changes to the Budget.

But other than giving MPs the lines in their electorates to respond to questions on the squeezed middle, it is difficult to see how the initiatives will meet medium and long term pressures.

There is also the risk that those in receipt of the cost of living measures see the one-off payments as an insult - a lack of understanding of the pressure they are facing.

At a cost of $814m, some may see this as a gross overspend that doesn't deliver any relief.

ACT have named this the 'Brain Drain Budget'.

And Treasury forecasts show that the team of five million is shrinking.

We have always expected that lifting the Covid-19 border controls would allow people to go overseas, but as David Seymour has stated there is little in the Budget to keep those in New Zealand who aspire to earn over $70,000.

Since Grant Robertson became minister of finance, government spending has gone up 68 percent. With all of the growth forecasts slashed and most of the increased tax revenues spent, there is little in the Budget that shows the government is doing anything to stop the country from going backwards.

Granting everybody's wishes may be fun, but it is unsustainable.

*Brigitte Morten is a director at Franks Ogilvie. Before that she was a senior ministerial adviser to the Minister of Education in the National-led government, and an adviser and campaign director for Australia's Liberal Party.

Get the RNZ app

for ad-free news and current affairs