Editorial: A 'don't worry, be happy' Budget

This Government is the most conservative New Zealand has seen since the Holyoake era. Its mission has been to calm the electorate after a period of rapid economic change and promote modest improvement at a comfortable pace. It is a Government for good times and so far it has not been disturbed by an economic downtown. But already, in only its third Budget, it gives a sense of drift.

Its first Budget was deceptively vigorous as it set about fulfilling easy promises to weaken a few of the previous reforms. Its second was more positive, promoting economic "transformation". But its third, delivered yesterday, is a recipe for complacency.

The Government seems determined to resist any suggestion of urgency or crisis about the country's underlying condition. A year ago, the Prime Minister was as voluble as anybody about the difficulty of sustaining a First World living standard on Third World commodity trade. But none of that was heard from the Finance Minister yesterday. Dr Cullen treated us instead to bromides like this:

"New Zealand's long-term growth performance has been by no means calamitous. The absolute standard of living of the average New Zealand is far higher than it was some 50 years ago. This is reflected in such key indices as life expectancy, infant mortality and ownership of a wide range of key consumer goods.

"New Zealand has not seen a declining standard of living; its growth has simply not been as fast as in some other countries. This should serve to avoid the bouts of panic which sometimes seem to afflict at least some commentators."

As a social historian by training, Dr Cullen knows better than most of us that a simple rise in living standards is usually less important than relative standards. It is comparison with the conditions available in other countries that will determine whether New Zealand can keep or attract talented, productive people here and afford the goods and services of the developed world.

D R Cullen's complacency sits particularly strangely beside his observations in the Budget on the rising cost of healthcare. The Government is inclined to trumpet its hefty boost in health operating expenditure, rising from $7.4 billion in this fiscal year to nearly $9 billion three years on. But as the Finance Minister says, there is a limit to how long health spending can outrun the rate of economic growth.

Rather lamely, he warns the health sector not to regard the higher spending as an invitation to bid up the costs of new procedures and pharmaceuticals yet further. He should also warn an ageing population that the health services it will increasingly need and expect depend crucially on an economy that can generate stronger growth.

E DUCATION and health made up about equal shares of the Budget not so many years ago. Now health is far ahead of the more productive investment made in education. The extra money announced in this Budget for tertiary education, research and science pales beside the $400 million cumulative annual enrichment of the health sector. And yet it is education that the Government hopes will do most to reinvigorate economic progress.

To that end, it seems intent upon subjugating all decisions of students and institutions to the Government's strategic wisdom. As long threatened, a Tertiary Education Commission is to take charge of the sector and, with the Government's "guidance", the commission will rule on the "strategic relevance" of courses, programmes and providers. The Budget baldly states: "Those that cannot demonstrate strategic relevance will not be funded."

Private training establishments, which this Government does not like, will be the first to feel the pinch. Their overall funds will be capped next year and any new programmes that can prove strategic relevance can be financed only within the cap. The whole plan has a quite Stalinist ring. It assumes a great deal of labour market foresight from the appointed commissars and poses a threat to academic independence that universities must resist.

T HE most constructive proposal in yesterday's package may be broadband telecommunications, although there seems to be no money behind it. The Government says it will centrally manage a series of regional tenders for broadband services to distant localities. At least that seems a more useful project than the Budget's few other features, such as the foreign investment agency to be taken from Trade New Zealand and given to Jim Anderton's Industry New Zealand.

Otherwise it is "steady as she goes", as conservative Governments used to say when the economy was sliding down the rankings of relative wealth and they cared more for their re-election.

We seem to be back there.

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