Political Reporter Thomas Coughlan talks to Finance Minister Grant Robertson about today's budget.
Video / NZ Herald
OPINION:
As far as former Finance Minister Bill English was concerned, the only good Budget in a time of economic stress was a boring Budget.
Barring those that drove people to online calculators to work out how much they got in tax cuts, English engaged in sensible, not much tosee here Budgets without flashy gimmicks and lolly scrambles.
And he made an art form out of convincing the voters that boring was exactly what they had wanted and needed all along.
But then again, English was not contending with slumping polls.
The question Finance Minister Grant Robertson will now be asking himself is if the glitzy bit in his Budget – the Cost of Living payments – will be is enough to make his polling headache go away for a while.
One of the nicknames the National Party gave the Budget was a "Band-Aid Budget" - a budget that was little more than a Band-Aid for the cost of living problem.
It is an accurate name for it, and not only for the reasons National says.
The cost of living package in the Budget was intended as a Band-Aid for Labour's polling more than the household budget.
That polling has been crumbling like a well-aged cheddar and National and Act have been hacking it with the cheese knife.
Their concerted campaigns on behalf of the so-called "squeezed middle" had taken root and expectation was high.
Robertson's early attempt to dampen expectations by saying inflation spikes would be a short term issue failed miserably – and left him with little option but to scramble up something on the cost of the living front for the Budget.
It also meant he had little option but to target it at middle-income earners – or at least some of them.
Illustration / Guy Body
Lo, the Cost of Living Payment for wage earners who got less than $70,000 last year was born. It will last for three months - a period Robertson said was to allow the "storm" to ease. Robertson is now in a game of chicken with inflation - hoping the truck will at least slow down before the payments run out and he is asked what comes next.
It is far from certain Robertson will win.
It is obvious the cost of living package was a late clip-on to the Budget plan – Treasury had to cobble together its analysis in a hurry.
In that analysis, Treasury recommended the $1 billion go to those on low incomes as part of a child poverty package. Its reasoning was that the same amount of money would have a lot more impact there, rather than being spread thinly around wage earners.
It is not often that Treasury is one that preaches the Labour gospel as the preferred option and it falls on deaf ears in Labour.
But the Opposition parties had succeeded in making the "squeezed middle" a force that could not be ignored without looking deaf to the needs of voters – and therefore arrogant.
Robertson's cost of living package was more about trying to look as if the Government was responding than actually responding.
The Cost of Living payment will give those who earned less than $70,000 enough to buy 9 litres of petrol a week for three months.
It gave Labour the headlines it wanted for at least one day.
The headlines after the Budget was released focused on the cost of living element of the Budget, despite it being dwarfed by the whopping $11 billion going into health.
That will not displease Robertson. Whether or not people think it will much difference, it does at least look as if the Government was responding to their pain.
But what political benefit it has may be as short term as the package itself. Those who do not get it will wonder why not. Those who do get it may be underwhelmed.
Finance Minister Grant Robertson at the Budget 2022 lockup. Photo / Mark Mitchell
In the olden days, before Covid-19, something that cost $1 billion in the Budget was a big deal. But the conga line of zeroes at the end of the dollar signs in the last two Covid-19 Budgets have spoiled us in that regard.
It will also do little to put to bed chatter about tax cuts as the alternative longer-term way to ease the pain.
Many are already asking if Robertson has done enough or could have done more.
It is a different question to whether he should have done anything at all.
The cost of living payment ended up hogging all the attention from the Budget.
Robertson might have got more political traction had he instead stuck to his guns and kept health as the centrepiece. He would have needed a compelling story to accompany the $11 billion, more compelling than the health reforms – but rather what those reforms would deliver in concrete terms.
A Budget does not have to have direct handouts to be a winner with the voters if it pulls its weight elsewhere.
This year's Budget should have been called the Backlogs Budget – and pitched as money into government services in which massive backlogs have built up over the two years of Covid-19. Those span services from hip operations to courts and coronial services.
The longer those backlogs linger, especially in health, the more problematic they will become for a Government.
But one reason the Government can't afford tax cuts or more support for households can be seen in the rest of the Budget. The Government spends a lot, and it too is not immune to inflation.
Much of the $11 billion for health will almost immediately disappear simply in cost increases.
And National will be watching every cent.
It is often not how Governments spend the millions that determine trust in their financial management – but how they spend the cents.
Nobody will be able to argue that more should not be spent on health or education.
But National's aim will be to point that out and to convince people the Government is wasting their money.
Nor will the Budget measure put an end to the chorus from National and Act for more moves for the "squeezed middle". That will last as long as inflation lasts. Things ain't getting cheaper any time soon.
