The political strategy behind the Budget
By Richard Harman (author)
The political strategy behind the Budget was subtle.
Though its measures were directed to lower income households, it was intended to reassure nervous National Party supporters that this was a Government that not only cared but which could also confront Labour in its heartland.
And if an evidence of that was needed it came in a powerful speech from, Prime Minister Bill English during the opening salvos of the Budget debate in Parliament.
In a way, though Steven Joyce is now Finance Minister and delivered the Budget, this was still Bill English's Budget.
It was his insistence on eight years of fiscal discipline that produced the surplus that Joyce was able to give away.
Sometimes English, when he speaks, adopts an “awe shucks – I’m from Southland” persona.
But yesterday his was a dominant almost arrogant dismissal of Labour.
He used the word “confident” eight times to describe New Zealand.
“We are confident about New Zealand,’ he said.
“The Opposition parties simply are not.
“ They do not believe in our families and communities and our businesses.
“ We are confident about New Zealand, about the growing assurance of its place in the world.
“We are confident about our increasingly respected economic performance, growing faster and more sustainably than most of our peer countries, if not all of them.
“We are confident about the courage and the hope and the aspirations of so many New Zealanders who in the last few weeks and months have got off benefit, and whose children, therefore, are among the 50,000 fewer who are in welfare-dependent households.
“We are confident about the young women who get on with starting their online business, selling to the world in a way that probably should not happen, in theory, but in practice is being made to happen every day.
“We are confident that our primary production sector can deal with the environmental challenges that will help to reinforce our "clean, green" brand around the world and drive up the value of our products.”
“We are confident because we are going forward.”
National knows that the biggest risk it faces during the election campaign is that its own supporters don’t vote.
That’s why Party President Peter Goodfellow has been warning the party’s regional conferences not to become complacent.
But sources close to the Government say that what also worries the Beehive is that sections of the party’s support base are have become disillusioned at what they see as growing inequality, difficulty getting health care (particularly mental health care), rising crime rates (particularly in Auckland) and a failure to get to grips with the massive immigration-inspired population increases in Auckland.
Not surprisingly those were Labour Leader Andrew Little's themes.
"Nine years on under this National Government, we ask why we have such a chronic shortage of housing,” he said.
“Nine years on under this National Government, New Zealanders ask why 60,000 of our fellow citizens could not get hospital treatment last year, because the local hospital could not afford to treat them.
“We ask why our mental health services are stretched to breaking point and why in this beautiful country of ours we have one of the highest teen suicide rates in the developed world.
“Nine years on under this National Government, New Zealanders ask why so many schools are overcrowded, and why, with an ageing teacher workforce, so little is being done to grow the next generation of great teachers.”
Little questioned some of the figures in the Budget.
” I have to tell you: the biggest health risk this nation faces today is the amount of fudge being rammed down New Zealanders' throats that they are expected to take in this Budget,” he said.
And he got some heavyweight support on this.
Researchers at the Victoria University of Wellington and the New Zealand Institute of Economic Research (NZIER) say that while overall real per capita government spending is stable, a breakdown of new and projected Crown expenditure shows a significant transformation in the make-up of Government spending.
Education spending is projected to fall by 1.6% in the 2017 budget year, with spending falling about population and inflation by 7.9% by 2021.
Real per capita spending in health will fall slightly the coming Budget year (-0.1%), but over the forecast period is projected to fall to 7.9% below current levels by 2021.
Those areas seeing significant increases during the new Budget year include law and order (+5.3%), defence (+2.0%), and welfare (excluding New Zealand Superannuation) (+0.9%). However, all are projected to fall over the medium term as future operating allowances decrease.
Real per-person spending on New Zealand Superannuation is set to increase steadily, with a 2.5% increase in 2017 rising to 9.1% above current levels in 2021.
The Head of Victoria’s School of Government Professor and former Treasury Chief Economist, Girol Karacaoglu said this analysis provided a more accessible way to understand Government spending decisions.
“This Budget sets out a much-changed shape of the state when it comes to core services such as health, education and law and order, and it is important that New Zealanders have a solid understanding of what these changes mean in real, per capita terms,” he said.
NZIER Principal Economist and Head of Public Good Derek Gill said the analysis would help put the spotlight on the quality of government spending.
"For example, questions should be asked about the social return on the sharp increase in spending on law and order,” he said.
“Effective social investment would shift resources into the back-end of the justice system putting more effort in well-targeted prevention rather than negative spending on the front-end of law and order system."
But those subtleties will be lost in the election campaign.
Instead (judging by the Budget) it is going to be a positive/negative campaign with National appealing to peoples' "confidence" while Labour tries to paint a bleaker picture of life in New Zealand today.