Here comes the Budget

:  Bill English pre-Budget speech to Business New Zealand
 

Like icebergs slowly becoming visible in a mist the broad outlines of the Budget are now out in the open.

Over the weekend, speaking to the National Party’s South Island conference, Finance Minister Steven Joyce defined the four priorities within the Budget as:

Boosting public services

Spending on infrastructure

Repaying debt

“And then when we have the room seeking to lift family income so they can do better.”

By now, the details of the increased spending on public services appears to be largely out in the open as is the new plan to reduce debt.

But there is more to come on infrastructure in the Budget.

Joyce says that the Government has already committed to spend $6.5 billion on infrastructure and capital items this year.

“It’s never been this high before,” he says.

“The run rate used to be about $1 billion or $1.5 billion.

“In the nine years Labour was in office they got the new capital spend above $1 billion once

“All the rest of the time it was in the hundreds of millions.”

He has already announced a new debt target of reducing debt to 15% of GDP by 2025, and it is clear from a number of speeches that increasing family income will involve a combination of changes to the accommodation supplement, Working for Families, and the two lowest tax thresholds.

Yesterday English announced an increased $321 million of social spending (largely focussed on children) and an updated list 10 Better Public Service targets.

But behind yesterday’s announcement is an invigorated approach to the Social Investment programme which is now in the hands of rising Cabinet star, Amy Adams.

The establishment of the new super-Ministry, the Social Investment Agency, which will co-ordinate policy across a wide range of Government departments points to the most fundamental shakeup of the social sector since the introduction of the welfare state with the Social Security Act n 1938.

Already the social investment approach is being closely watched in Australia and apparently, British Prime Minister, Theresa May, has been asking questions about it.

 Steven Joyce at National's South Island regional conference

Steven Joyce at National's South Island regional conference

Joyce is also National's campaign chair, so in his pre-Budget speeches, he has clearly been rehearsing campaign themes.

“On average over the last few years New Zealand has grown faster than the countries we like to compare ourselves with; the US, the UK, the EU, Australia, Japan and Canada.

“Last year we were the fifth fastest growing economy across the whole of the OECD."

Joyce says that that growth had flowed through into the Government's books with the surplus in February estimated to be $900 million higher than it was before Christmas and with tax receipts running 8% higher than they were a year ago.

"That gives us the opportunity to do things including things that come up which you know as a government you want to do and actually should do."

Joyce links from this to two propositions.

First that we should do nothing to stop that growth and second, that we should provide for resilience both in infrastructure and also in Government finances to cope with threats in the future.

He asked his Christchurch audience to imagine what the impact of the Kaikoura earthquake might have been had it happened a few kilometres further north, nearer Wellington.

“One of the biggest risks for the New Zealand economy at the moment is the more insular economic policies being pushed overseas and by some of our opponents domestically.

“Many politicians, including some in New Zealand who shall remain nameless, want to be more protective on trade; they want to slash immigration; reduce foreign investment; centralise wage bargaining; blow up our research and development incentive system and stop all roads being built.”

English has his own spin on this.

Speaking yesterday from a teleprompter, an unusual move for the Prime Minister who usually prefers to speak without notes, he carefully laid out the return on the Government's growth record.

“The point is that growth delivers more jobs, higher wages and more choices for New Zealand families,” he said.

“After adjusting for inflation, on average, take home pay has increased twice as fast here as it has in Australia since we came into office in 2008.

“And we have one of the highest employment rates in the OECD.

“These are the rewards for the hard work, innovative thinking and risk-taking that are driving your businesses and growing our economy.

“That growing economy gives us options.

“Improving public services, building infrastructure, and solving social problems is possible only because we’ve enjoyed sustained, solid economic growth.

“The logic is pretty simple – a stronger economy means more jobs and higher wages, driving a greater tax take and increasing surpluses.”

And that sounds suspiciously like the overall theme for the Budget and National’s election campaign.

 

 

 

 

 

 

 

 

 

 

 

 

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