Robbing Peter to pay Paul

But for a small matter of inflection, zero rhymes with hero. In the lead-up to tomorrow's "zero budget", the Government, and Finance Minister Bill English in particular, have done their best to assume a pose of heroic proportions, to make a virtue out of their closed-purse approach.

Given the state of the nation's books, plaudits for such parsimony are deserved. Prime Minister John Key's Administration has long stated it intends to have the country back in surplus by 2014-15. As even the Opposition seems to agree (albeit with the rider it would have aimed for and achieved the same), it is well on the way to hitting the target.

Such fiscal discipline is all well and good. But at what cost?

Where is the imagination and the ambition that would suggest the Government, while keeping a tight grip on the nation's finances, has a plan to move the economy ahead?

Where are the signs of a thaw, of the green tendrils of growth?

For a "zero budget", as has been pointed out by the Opposition, can equally mean a budget that has nothing in it to promote employment, or progress towards the kind of economy that this country needs if it is to survive the challenges of the future.

Tomorrow's unveiling may yet provide surprises in this respect, but this is hardly likely given the announcements that have been made to date. In conjunction with the "zero budget" line, these would seem to indicate the work leading up to Budget day has primarily involved creative shuffling and a good deal of "reprioritising" - a sort of managerial byword for robbing Peter to pay Paul. This, too, it can be argued, is necessary. Looking at the overall spend across government departments, scrutinising its effectiveness, assessing whether certain needs have higher, or more immediate, claim on the available funds, is the proper work of a well-managed administration.

Thus to date there have been a number of staged releases. Last week, for example, it was announced the cost of prescriptions would rise. The quid pro quo would be $101 million in reallocated and new spending.

This would include funds to increase elective operations, to speed up access to important diagnostic tests such as MRI scans, CT scans and colonoscopies, and for better and faster services for cancer patients.

In education, $511 million will be available but some of this will come from making class sizes bigger - which effectively means fewer teachers - and some of it will go to a teacher appraisal system, the first step towards the possible introduction of performance pay for teachers.

For the police, a cost-neutral budget but with requirements to find a 3% operations cut and a 4% cut in non-sworn staff will in effect mean significant cuts.

With the annual pay round and service increments to fund, estimates put the size of this at up to $120 million. So it is across a number of ministries and departments, which presumably must fund their own inflation-related pay rounds through natural attrition, redundancies or other efficiencies.

The overriding message is there is no extra money. It is a message that leans heavily towards the kind of austerity that has, of late, met voter disapproval in Europe and elsewhere, and which could be said to be at odds with the philosophical thrust of world leaders at the weekend's G8 meeting in the United States. There, the majority, if not all, were in favour of new stimulus measures to assist ailing euro zone economies out of the stagnation in which many now sit, penned there, they argue, by German-led austerity measures.

Among these powerful world leaders, fearing for the very future of the euro zone, was a consensus that belt-tightening had to go hand in hand with "our imperative" to promote growth.

This is where tomorrow's Budget might disappoint even the Government's natural business constituency. Reining in debt is one thing; creating a resourceful and resilient economy is another. Mr Key and Mr English may rate highly on the former, but are likely to score a "must do better" on the latter.

 

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