Finance Minister Grant Robertson at his photo op for his Wellbeing Budget 2022. Video / Mark Mitchell
OPINION:
No pressure, but Finance Minister Grant Robertson has four very big tasks in front of him today. First up, he has to settle the nerves of everyone threatened by inflation.
Fruit and vegetables are up 17 per cent and housing construction 18 per cent. Mortgage rates are doubling. Overallthe inflation rate is 6.9 per cent but wages have risen by less than half that.
This is the urgent need. Get the inflation battle wrong, today and over the next year, and nothing else will matter.
But Robertson also has to speed up the process of aligning the country's economic and environmental goals. This won't be top of mind for anyone wondering how to pay this month's bills, but it has to be top, bottom and all the way inbetween in the mind of the Minister of Finance.
It's the most complex and important task he faces – and that every finance minister for the foreseeable future will face. And he will want to do it in a way that reinforces his party's own electoral goals.
The economy, the climate, getting re-elected. There are many ways to align any two of these three things, but Robertson has to get the full trifecta.
Get the inflation battle wrong, today and over the next year, and nothing else will matter, says Simon Wilson. Photo / Brett Phibbs
In theory, he's coming from a position of strength. New Zealand debt as a percentage of GDP will peak at only half Australia's and a fifth of America's. It's simply untrue to label the Government spendthrift.
GDP itself is up 5.6 per cent on a year ago and unemployment is down to just 3.2 per cent. Hospitality and tourism aside, businesses all over the country have survived and often prospered as a direct result of the Government's pandemic policies.
But does it matter? Business leaders protest loudly at how mistreated their members are and, in politics, perception is reality. The narrative, reinforced by everyone who loves an outrage, now runs against the Government.
That's Robertson's third task: to get voters believing a better story.
And in doing all that, he cannot, must not, neglect his fourth task: to address the fast-widening gap. It's a wealth gap, a gap in health and education, a housing gap, an aspirational gap.
"Aspirational" is a word usually applied to people who want to grow their business. That's a good goal. But there are 27,000 applicants on the social housing register waiting desperately for a home, 11,300 of them families with children, and countless more trying to save for a mortgage deposit. Unknown numbers waiting for healthcare, hoping for a better chance in education, wishing for a decent pay rise, a job with settled hours, a life free of violence.
Their dreams are aspirational too.
Finance Minister Grant Robertson has four big tasks ahead on Budget Day, but they're doable. Photo / Mark Mitchell
You can blame Covid for much of the pain so many people face now. Along with the war in Ukraine, supply chain failure, the climate crisis, the greed of energy corporates, the instability of US-China relations. And you'd be right: they are all to blame.
But that's not the point. This is the world we live in now and Robertson has to produce a plan to deal with it.
In one sense, the economic, environmental and electoral goals are already aligned. All three require Robertson to act with urgency. If he doesn't, inflation will get away on us, we won't reduce emissions this decade and his party will lose the next election. He has to seize the day.
How? Some of it wouldn't even be that hard. He could:
• Build at least 5000 social housing units a year.
• Supercharge the programme to make existing homes warm, dry and energy efficient.
• Compel banks to provide a debt-management programme for farmers who cannot reduce emissions because their banks require them to maintain unsustainably high stock numbers.
• Allow beneficiaries to receive the $72.50 per week Working for Families tax credit for a child (more for larger families). This critical measure would address the greatest need among the lowest-income households.
• Treble the disability and child disability allowances. The pandemic brutally exposed just how vulnerable many disabled people are and these allowances have not been increased for years.
• Create a fast-tracked plan to move a big chunk of freight to rail and coastal shipping.
• Extend the half-price public-transport fare regime indefinitely. Provide new funding for councils to ensure services are not cut and to allow "free fares" trials.
• Subsidise e-bikes, especially in lower-income communities.
