This includes a Working for Families in-work tax credit, which is set to increase, giving 160,000 low- and middle-income families with children up to $50 a fortnight.
The Government says 83 per cent of Kiwis will receive some form of tax relief.
Simon Wilson is an award-winning senior writer covering politics, the climate crisis, transport, housing, urban design and social issues, with a focus on Auckland. He joined the Herald in 2018.
I did like the howls of anguish from the Taxpayers’ Union (TPU) after theBudget last week. The “Mother of All Disappointments”, they called it. Full page ad in the Herald and everything.
I’m not saying I share their pain. Absolutely not. But I recognise it. Probably most people do. It’s the feeling you get when a government seems to promise good things – things you believe are much needed and long overdue – and then it just doesn’t do them.
National and Labour, the pair of them, guilty as charged. They differ in many ways, but on one thing they are united: both are addicted to promising us we can have low taxes and a high level of public services: better hospitals, better transport, more police.
So they compete to be the best at making that fantasy seem convincing. And then they can’t deliver.
They do this because they believe elections are won by convincing enough “floating voters” the fantasy is real, that it is possible to say yes to contradictory things.
Willis’ first Budget has been called a “political success” for this exact reason: it managed to fudge that contradiction, by not leaning too much in any direction. Debt is rising, but not by a lot. There are cuts, but they could be worse. Some frontline services are getting a boost, but others are being cut. No one, we’re supposed to think, should be too upset.
But “political success” just means vote winning. Leaving that aside, was it a good budget for the country? No it was not.
As commentators from across the political spectrum frequently say, this chasing after “floating voters” doesn’t really do any of the things we need governments to do. It holds back productivity. It fails to ensure a decent safety net for the vulnerable. It stalls our infrastructure and leaves us unprepared for crises to come.
Instead of proper strategic planning, we get sugar hits. Tax cuts! But also rising costs that eliminate their benefits. And the longer we’re stuck like this, the worse things will get.
Herald columnist Matthew Hooton has suggested there are two other models we could choose from: Singapore and Scandinavia. They’re very different.
Singapore proudly insists it is not a welfare state. Taxes are low, but there’s no unemployment benefit, no minimum wage and no state pension. Welfare, primarily, is the responsibility of family.
The trouble is, families are getting smaller. So while the economy is strong, the wealth gap is widening and the elderly are among the worst affected. A quarter of retired Singaporeans live alone and old-age poverty is rising sharply.
The TPU leans to the Singaporean model. No surprises there: they’ve always had a wretched disdain for the struggles of everyone who isn’t a “winner”.
But no New Zealand government is going to burn down the welfare state. It’s an absurd thing to hope for.
So what about Scandinavia, then? Sweden, Denmark, Finland, Norway, Iceland: they all have relatively strong welfare states, high standards of living and higher taxes to support them.
Hooton, like the TPU, prefers Singapore, although he has said recently he’d be happy enough with Scandinavia if we do it well.
“I prefer ‘Singapore’,” he wrote on his Patreon blog, “but would be quite happy with ‘Scandinavia’ if that were the consensus. The main thing is to choose one and get on with it rather than remain stuck in the middle as we have been since 1999.”
There it is. Even Hooton. So let’s choose Scandinavia. And let’s stop saying the failure to make a choice at all is a good thing.
This isn’t just a debate about abstract economics. The real-world consequences of being stuck in the middle can be devastating.
In the same week Willis delivered her Budget, five people were killed in a head-on crash on State Highway 3 near Te Awamutu in the Waikato. It was our deadliest crash in two years, which is another way of saying both that it was awful and not really uncommon. The police said one of the cars crossed the centre line.
Scene of the fatal accident last week on State Highway 3 near Te Awamutu.
Road authorities have known for 20 years that a cable barrier down the middle of the road is the best engineering solution to “eliminating the likelihood of deaths and serious injuries”.
By 2016 the evidence for this had become so clear, the Ministry of Transport and the NZ Transport Agency jointly asked Minister of Transport at the time, Simon Bridges, if it would be “ethically responsible” not to fund a big programme to install cable barriers.
The question fell on deaf ears. We have almost 11,000km of state highways, but cable barriers have been installed on only a few small sections. The funding priority has always been elsewhere – most notably in successive National Governments’ Roads of National Significance (Rons).
When Labour came to power in 2017, it cancelled the Rons, but despite the best efforts of the Associate Transport Minister, Green MP Julie-Anne Genter, the Government did not supercharge the median barrier programme. Now the Rons are back, gobbling up the transport budget.
Rons do make the roads safer, because they separate the dual carriageway. But the new four-lane highways now proposed will costs billions, for just a few tens of kilometres. For much less money, SH3 and all 99 other state highways could be made safer, with widespread use of median barriers and more three-lane highways (think passing lanes).
You know who invented three-lane highways? Sweden.
The tragedy near Te Awamutu last week was not a random or unavoidable event. It was the consequence of political choices our politicians have made and keep making.
Elsewhere, they’ve made different choices: the rate of deaths and serious injuries (DSIs) on our roads is 80 per cent higher than in Australia and 350 per cent higher than in Scandinavia.
But while our Government has committed to evidence-led policy in both its coalition agreements, that’s not what it’s doing with road safety.
The evidence is clear that there are three big ways to reduce deaths on open roads: median barriers, lower speeds and more enforcement of the road rules.
But the Budget did not support the first or the third. In fact, it cut the $100 million increase Labour introduced just last year for enforcement. And speed limits are going back up. So more people will die.
Sugar hits, instead of good planning.
A median wire barrier in place on the Waikato Expressway near Te Kauwhata. Photo / Doug Sherring
Another is the cuts to services for beneficiaries, which the Child Poverty Action Group (CPAG) calculates will put 20,000 more children into poverty.
Beneficiaries don’t get anything from tax cuts, but there are votes to be won in bashing them, so on it goes. The Budget retains the $50m or so the Government spent last year investigating benefit fraud, although it generated only the same amount in savings.
White-collar crime, on the other hand, is a $7 billion activity. But the Serious Fraud Office gets a mere $17m a year to fight it, an amount that remained static in the Budget. Effectively, that’s a cut. No votes to be won there?
Looming over all this is the climate crisis. It seems incredible, but it still doesn’t frame our economic and social planning. Instead, it’s been treated as disposal spending, easy to cut.
About half the $5b or so previously earmarked for climate-related spending has been redirected into the general accounts. Included in that: funding for expanding native forests, research to shrink on-farm greenhouse gases and work on how to price those gases.
And if that seems like bad strategic planning, what about this? The Warmer Kiwi Homes scheme has been cut back and funding for a range of efficient home-energy measures will stop. That’s just vindictive – against poor people.
This comes, remember, on top of all the other previously announced measures that will undermine climate action and weaken the environment. The list includes but is not limited to the new mining and fishery plans, and disincentives for electric vehicles and public transport.
There are people who say the drop in support for the coalition Government could mean it will survive only one term.
If you ask me, one-term governments could become the norm.
We might like the idea of tax cuts, but we all know the world is in crisis. And we all know things could be better than they are. Scandinavia proves it. So parties that promise to fix everything up, and then don’t, will be quickly voted out.
But will the next lot learn the lesson and be brave enough to do better? What chance a government prepared to lead from the front, to win us to the merits of good policy?
And if we were to go all Swedish, what would that look like? Stand by.
