John Armstrong: Cullen buys some good news

COMMENT

Take it from Michael Cullen. Budgets don't win elections. They only lose them.

Of course, the Finance Minister would say that, wouldn't he?

Having delivered a Budget which would make even an arch-pragmatist like Sir William Birch blush, so blatantly political is its content, Cullen is naturally at pains to play down suggestions that the Budget is designed solely to buy votes.

However, Cullen is essentially correct.

Politicians are punished for tough Budgets; they get little thanks for generous ones.

Putting it another way, there is no direct correlation between handing out cash and receiving a dividend in votes.

Ask Sir William.

In early 1996, the former Treasurer unveiled a combined package of tax cuts and tax credits worth up to $120 a week for some families.

He timed it so some of the cash flowed into people's pockets just before the election later that year and the remainder afterwards.

Sound familiar?

In Birch's case, the opinion polls barely flickered; National's election-day vote was unchanged on the party's 1993 showing.

But there are crucial differences this time.

Back in 1996, people wanted the Bolger Government to spend money on restoring rundown, state-provided social services - not tax cuts.

When it comes to social spending, Labour has delivered.

And will continue to do so.

That is the untold story of this week's Budget.

The attention given to the income top-ups - families who are earning between $25,000 and $45,000 get an average of $100 extra a week - has obscured a staggering spend-up by Cullen elsewhere.

The Budget lays out a programme of new spending spread over the next four years worth close to $13 billion.

However, the income assistance package eats up only $3 billion of that $13 billion.

Some $7 billion is set aside for "strong public services" - primarily health and education.

In fact, the health vote, which has soared by more than a third since Labour took power in 1999, will soak up almost as much as will be spent on the income top-ups.

The numbers add up to one thing: Labour is not making the mistake Birch made.

Labour is also not making the mistake of spreading income assistance too thinly.

It has targeted the top-ups more narrowly, but in higher dollar amounts to get a bigger political bang for its bucks.

The risk to Labour - as today's snap Herald poll suggests - is that voters may be more comfortable with the notion of simple tax cuts than the complexities of targeted assistance.

Where Labour has definitely tripped up is in its timing.

It must now be kicking itself that it did not unveil the income-assistance package when it still had a big lead in the polls.

Had it done so, it would not now be fielding accusations that the Budget is self-serving.

Cullen can argue until he is blue in the face that the package was in the planning long before Don Brash's Orewa speech.

But the gloss has been stripped from the document.

Despite that, Cullen and his colleagues will still expect the Budget to do two things for Labour beyond the ideologically motivated redistribution of tax revenue away from the rich to the low paid.

First, in the short term, Labour will have its fingers crossed that the Budget marks a turning point in what has been a dreadful year.

On that score, the Budget's reception - reasonably glowing reviews from those waging the war on poverty and predictable scorn from the business elite - is what Labour would have hoped for.

A not-so-obvious byproduct of delivering (finally) to working families on low and modest incomes is that it should arrest some of the drift that always afflicts long-serving governments - the drift away of traditional supporters sick of the inevitable compromise of government, who seek succour in the ideological purity offered by minor parties.

In that sense, the Budget is bad news for the Greens - and very bad news for Tariana Turia's new Maori Party because, although Cullen expressly avoided saying so, the Budget will benefit large, low-income Maori families.

That means Labour can head into election year without a debilitating battle on its left flank.

It can concentrate its energy on the real enemy - National.

In that regard, Labour will hope the Budget shifts debate back to the fundamentals of good government - economic growth and fiscal rectitude - and away from race relations.

However, whether the Budget is a real circuit-breaker or is just a one-day wonder is very much in the minister's hands.

At present there is an arrogance and political sloppiness festering into a blame-anyone-but-ourselves siege mentality in the Beehive.

It is time for the Prime Minister to turn off the sarcasm.

And it may be time for a Cabinet reshuffle.

The structure of the Clark Ministry is way out of kilter. There are too few ministers doing far too much work - and too many doing too little.

Highly competent ministers such as Cullen, Steve Maharey, Trevor Mallard and Phil Goff are overburdened. The Government's overall coherence and political management is suffering.

The mess Goff got himself into over the legislation which would have taken a permissive position on teenagers under 16 having sex is a case in point.

It should ring alarm bells. If it does not, then the opportunity offered by the Budget to wipe the slate clean will have been squandered. The Government will stumble on as before.

The second major thing that Labour will expect of the Budget is a buttressing of the Government in the countdown to next year's election.

This Budget is as much about avoiding bad things happening as making good things happen.

The money being poured into health, education, prisons, police, housing and Child, Youth and Family has an additional motivation beyond mere party doctrine: Labour wants to keep those sectors out of the headlines.

And, come election day, political management may count for more than income top-ups which never quite satisfy constantly rising expectations.

Voters simply see the money as their due.

And the more they are reminded of the Government's generosity - as National discovered to its cost - the less grateful they become.

What is likely to influence voters far more is their assessment of the Government's overall competence.

That has been Labour's strong suit - until recently.

This Budget provides Labour with the flushest of fiscal war chests to restore that advantage.