Comment: For a brief moment, the three coalition parties managed to portray an image of unity while presenting a Budget that genuinely meets the desires of their different constituencies – and then it all fell apart.
Finance Minister Nicola Willis, accompanied by associate ministers Chris Bishop, David Seymour and Shane Jones, marched proudly into Parliament’s cavernous Banquet Hall and for a while downplayed their differences. It echoed the foursome’s show of unity two days earlier, during their pāua pie excursion.
Then, still more than five months out, the election campaign inserted itself into the Budget day events, with Willis unable to restrain herself from attacking Jones over his party’s position on reforming NZ Super. It went downhill from there, prompting mutual recriminations among coalition partners over the course of the day.
While the dispute over Super and a windfall tax on bank profits (supported by NZ First and National, blocked by Act) may have made headlines, the delivery of the final Budget of this term of Parliament also puts the onus on Labour to start unveiling its own election policies.
Divining winners and losers among the governing parties that assemble a Budget is a blunt, black-and-white exercise even when there are large disparities in each party’s achievements.
In this Budget, it is even more futile, as all three coalition partners have plenty to show to their constituents.
New Zealand First has secured $1 billion for investment in rail, in a light-on-detail pledge that will be sure to excite the regions.
Winston Peters not only protected his prized Ministry of Foreign Affairs and Trade from 2 percent baseline cuts but also landed hundreds of millions in new funding. Even if the department makes cuts at the next two Budgets, as Willis has committed to and Peters has rejected, it will still be ahead because of the size of this year’s infusion.
In another win for the silver-haired crowd, Peters has also found funding to turn the SuperGold Card into a legal form of identification.
On Act’s side of the ledger, the greatest interest will be in what was cut or blocked, rather than what new spending is available. There, leader David Seymour has a significant overhaul and slashing of the public sector to point to. And he was also eager to promote how he kept the Government from proceeding with some form of additional tax on bank profits, beyond the levy introduced to cover the costs of the Reserve Bank’s regulation of the sector.
He also secured a coalition commitment, with the dispensation of central government funds to councils when they consent new housing developments. Although the coalition agreement called for this to be allocated from GST proceeds, the new mechanism will still see $100 million a year potentially disbursed to local government to incentivise housing growth.
For National, the clear jewel in Willis’ Budget crown is the forecast showing the Government will return to surplus a year earlier than previously projected. That will serve as proof of her fiscal restraint bona fides when she goes to the electorate seeking a second term. It will also keep the ratings agencies at bay, after two issued dire warnings that New Zealand was teetering on the edge of a downgrade.
Beyond that, there is ample funding in all the key areas: boosts for secondary schools; pre-announced funds for the health system; and big capital investments in hospitals, schools, courthouses and, most important of all, a Road of National Significance.
All that is to say that there are no clear losers among the three coalition parties in this Budget. It’s a fair starting point for an election campaign for all of them – which is good, because the campaign is now on in earnest.
During the Budget lock-up, with NZ First’s Jones seated just to her side, Willis took a swipe at the party’s reluctance to back reform of superannuation.
“I believe – and I’m conscious there are others to my left who might have a different view – that in the absence of doing anything about our settings for the future, we will be committing a huge act against intergenerational equity,” she said.
“That is to say, that governments who put this off forever are essentially committing to tax people my age and younger more, and to pay less Super in the future. At some point, a responsible government needs to propose gradual, sensible, moderate changes that are well forecast for New Zealanders.”
Peters, speaking afterwards, said it was an “unfortunate mistake that she should not have made”, continuing the war of words between the pair that has played out, intermittently, for several months.
If the looming polling day has upped the scrutiny on the political positioning of the coalition parties, it has also prompted even more pressure on Labour to begin revealing its own plans.
Leader Chris Hipkins was, once again, in the difficult position of rubbishing a new Government policy but then refusing to say whether Labour would undo it or what the party would do differently.
In some ways, this is a prison of Hipkins’ own making. He could take captain’s calls on particular issues, such as the public service cuts, that he is otherwise strongly posturing on. He has done so in the past – pledging to repeal the Regulatory Standards Act or block the Government’s planned LNG facility, for example – but is generally reluctant to do so.
Perhaps Hipkins believes the public will reward him and Labour as thoughtful and considered fiscal managers when they see him saying he needs to digest the Budget before he can strongly talk about it.
Perhaps the public will. After all, for all the criticism of the party’s lack of policy, it remains ahead of National in the polls and close to forming a government with its minor party allies.
On the other hand, there is a palpable sense of frustration from at least some of the party faithful that Hipkins has yet to sketch out a compelling alternative government to the coalition.
When he landed in Opposition, Hipkins promised Labour would not play the role of the dog barking at every passing car. But in the absence of its own vision of what it would do differently, Labour has been something of a ghost in Opposition.
There’s something to be said for not interrupting your enemy when they’re making a mistake, but eventually Labour will need to remind the public it exists.
Much of that angst may be put to bed in the coming weeks, when Hipkins at last begins debuting new policy beyond the limited capital gains tax, free GP visits, light-on-detail Future Fund and gaming sector tax rebate it has announced so far.
Those new policies are due to arrive from mid-June, though they will of course be trickled out over time. The key question facing Hipkins is whether, in sum, they will convincingly portray how the public could be better off under Labour, after more than two years of saying the party would do something different but not saying exactly what.
.png?w=600)
