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As the debate on the alleged “fiscal cliffs” left by the former Government heats up heading into Wednesday’s mini-Budget, Labour has released its own list of alleged cliffs left by the former National Government in 2017.
The list, compiled by the Parliamentary Library, includes 155 budget lines relatingto things that were funded at the 2017 Budget on a time-limited basis, meaning the incoming Labour Government had to decide whether to continue funding them or not.
Finance Ministers can choose to fund programmes on a permanent basis, or to give them funding for a limited number of years.
Time-limited funding has been used by the Government to pilot schemes, put pressure on errant ministries to look after the money they have before asking for more, and to respond to temporary shocks - the 2023 budget involves many Cyclone Gabrielle-related lines of funding, while the 2017 list includes lines relating to the Kaikoura earthquake and the Port Hills fire.
AHerald investigation published earlier this week found there were 190 lines of the 2023 Budget relating to lines of spending that end before the four-year forecast period ends. That list is not directly comparable to the list of the Parliamentary Library. The Herald list excludes capital injections, Cyclone-related spending, and spending to do with cleaning up the mess of the Holidays Act.
The Herald found $1.7 billion in spending on time-limited initiatives this year, $1b next year, and $297,500 the year after that.
The Parliamentary Library list has not attached a figure to its tally.
Finance Minister Nicola Willis says Labour’s use of the time-limited funding has gone far beyond what this type of funding is intended for, and that former Finance Minister Grant Robertson gave temporary funding to things that should have been funded permanently.
“I’m accusing [the former Government] of upholding the letter of the law but not necessarily its spirit, because I think what they did was they found clever workarounds to make the books look better than they really are,” Willis said.
“For example, it is absolutely permissible for a Government to only short-term fund a programme. That is allowed. But when you know that you will have to go back to fund it in future Budgets, then actually you should just be funding it for the long term,” she said.
Labour, and Robertson argue this National is kicking up a fuss over fairly a fairly standard practice as part of an effort to discredit the former Government’s management of the books.
Robertson told the Herald the list showed there was a long history of time-limited funding.
“There has been time-limited funding as long as I’ve been around. In 2017 we inherited a Budget with a significant number of lines of time-limited funding in there,” Robertson said.
“I recall ones that I was surprised by myself, but for the most part this is what has been in Budgets,” he said.
What did National leave behind?
The list of 2017 “fiscal cliffs” is a time capsule six-year-old issues, dredged to the surface for an election year budget.
Ironically, given National in opposition slammed Labour’s passion for strategy documents and working groups, the 2017 Budget included funding for several such initiatives, including a national strategy for the prevention of dog attacks, costing $850,000.
There was also a top-up for the Battle of the Birds competition of 2017, and $17 million for the Defence Force to beef up its underwater “intelligence, surveillance, and reconnaissance capability”.
All three funding lines lasted for less than three years.
Another line sets aside funding for a Mental Health Working Group, another for the inquiry into the Havelock North drinking water contamination incident - the inquiry that would eventually lead to Labour’s Three Waters reforms.
Minister of Finance Nicola Willis will publish her mini-Budget on Wednesday. Photo / Marty Melville
The Government set aside $1m for the Te Mana o te Wai fund, which would look at improving the health of waterways. Te Mana o te Wai is a concept of water health that became politically toxic when Labour introduced it to its Three Waters reforms.
For the most part, as with the Budget 2023 initiatives, the list is fairly benign: some additional capital for new office accommodation for the Ombudsman, funding to address cost pressures in Ministerial Services, and money to help Stats NZ publish its GDP stats more quickly.
It’s hardly dreadful stuff. The Herald’s investigation into the 2023 Budget was also unable to find anything damning.
Off a cliff
The new Government plans to release a list of “cliffs” compiled by Treasury, when Wednesday’s Half-Year Economic and Fiscal Update is published along with Willis’ mini-budget.
The existence of time-limited funding, or “fiscal cliffs” is not in doubt. The unanswered question is whether the Government’s use of time-limited funding was justified, or whether it used this tool to make the books look better than they actually were.
As Robertson was fond of saying, just one more sleep...
Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.
