Budget 2023 review: Claire Trevett: No tax cuts, no lollies - not an election-winner, not a loser either

OPINION

The vast bulk of New Zealanders got little or nothing in the Budget – and that was the plan all along.

It was Prime Minister Chris Hipkins’ first Budget as Prime Minister. He doesn’t particularly want it to be his last.

So the trade-offs were made: was it to be an election-year lolly scramble straight into voters’ pockets, or a bid to pitch it as a virtue that they restrained themselves from doing that?

They will be hoping voters notice that they opted for the latter.

Some will be underwhelmed, even if they had very low expectations anyway.

But it is more likely to be met with indifference than disappointment. It will be forgotten quickly.

In the short term at least, voters would probably prefer to see inflation start to drop than get a few more dollars in the hand.

Most are used to Hard Times Budgets which offer little to them directly – former Finance Minister Bill English had helped immensely in getting people used to them.

Finance Minister Grant Robertson shakes hands with Prime Minister Chris Hipkins while receiving a standing ovation from his Government colleagues after presenting the Budget. Photo / Mark Mitchell

So Labour settled for what was a Budget of bits. A little bit here, a little bit there - and a massive bit for the infrastructure programme, spread out over a long time.

As far as Hipkins’ bread and butter metaphor goes, it was butter spread thinly across a vast expanse of bread - and with no indication of when or whether any jam might come.

What mattered more than lollies was the impact on inflation – and while the Budget did little to speed up the pace at which inflation is forecast to ease, it didn’t worsen it much either on Treasury’s forecasts.

In the lead-up, Hipkins had simultaneously pitched it as a cost-of-living Budget and a no-frills Budget.

The cost-of-living side was to be targeted – but it may have been more targeted than many expected. There were no tax cuts, no Working for Families moves.

The removal of the $5 co-charge on prescriptions applies to everybody, the free and half-price public transport moves for school students and under-25s will also help many by a little bit.

But the biggie – an expansion of subsidised early childhood education to 2-year-olds - costs a lot and will only apply to people with toddlers and won’t kick in until next year.

It was Robertson and Hipkins trying to put National in an awkward place of having to justify how their tax cuts promise won’t worsen inflation – and spell out just what they would cut to pay for them.

It didn’t take long: by the end of the day, National’s finance spokeswoman Nicola Willis had said National would reinstate the prescription charges, arguing they were a “nice to have” and most could afford them.

Both National and Act tried to label it the blowout Budget and predict it will end in economic destruction. It is Opposition rhetoric: or at least will be if Treasury’s forecasts are accurate.

They could not accuse Labour of splashing too much cash, so instead have had to settle for accusing them of not cutting their spending enough.

It is a question that merits asking: why is spending still barely below what were supposed to be the glut years of Covid-19?

The answer Robertson gave was the cyclone – and inflation.

Not all the numbers look good: inflation won’t be back down to 3 per cent until September next year, unemployment is set to rise to above 5 per cent. But a return to surplus is in sight and Robertson argues the numbers do look good in contrast with the global financial crisis.

The Budget won’t win Labour the election. It wasn’t designed to.

The aim was to make sure it didn’t lose them the election. To achieve that, they needed to ensure voters could at least see easing inflation and interest rates in the light at the end of the tunnel. They need Reserve Bank Adrian Orr to also see that - a bit more of a challenge.

If those numbers do start to drop, Labour will be hoping they, too, can offer some jam in their election campaign.