The philosophical divide Budget

This year’s Budget, more so perhaps than any in recent years, will clearly demonstrate the fiscal and political philosophies of New Zealand’s main political parties.

Last week the third quarter Crown accounts were released, and showed what in any other circumstance would be an eye-watering operating deficit of $8.1 billion.

However, that vast figure is as ‘‘nothing’’ when contrasted against the $12.2 billion deficit which had been forecast in the December accounts.

Much of the extra $4.1 billion — $2.7 billion — is due to greater-than-expected tax revenue: corporate profits have been stronger than predicted and continuing low unemployment means more people are working and having their pay docked accordingly.

It is at this juncture that the parties go their separate ways ideologically.

Labour Finance Minister Grant Robertson will have considered the more robust economy than predicted following two years of pandemic-induced economic hardship when drafting Budget 2022 and decided the time is ripe for more spending on infrastructure and services.

The Greens too, will have their hands out to fund the environmental initiatives it seeks as part of its agreement with Labour.

National and Act New Zealand, on the other hand, will be using phrases like ‘‘taxpayer-funded slush fund’’ and demanding that wage earner’s hard-earned be returned to them in the form of tax cuts or adjustments to tax thresholds.

They will also point out that the Government would be better placed retiring debt and cutting expenditure while the books are relatively healthy, rather than being forced to do it if a crisis comes.

That scenario is not too far-fetched, given the war in Ukraine rumbles on, Covid-19 has not gone anywhere, and jittery global stock markets are watching both those issues nervously.

The divide comes down to the essential question of what people view government should be for: an interventionist force to improve people’s wellbeing, or a provider of essential services which should otherwise keep out of its citizen’s private affairs.

Mr Robertson likes to talk about how he learned the virtues of state support when growing up in South Dunedin, and he will have those battlers in mind when he delivers the Budget on May 19.

It has been well-signalled that there will be major spending on health this year: no surprise there, as the parlously-funded district health boards are about to be no more and the new Health New Zealand and the Maori Health Authority will need funding appropriate to their herculean task.

Relatedly, we can expect greater provisions for welfare and wellbeing.

More broadly, Mr Robertson has also let it be known that the health of the planet will also be on the Budget agenda, as New Zealand moves to decarbonise its economy.

Southland, in particular, will be watching this closely to see if any clues are given for its future once the Tiwai Point aluminium smelter, as expected, closes.

Aside from all the bickering, which is entertaining enough, what should New Zealanders hope for in Budget 2022?

Firstly, the rhetoric of greater investment in health must be matched by a realistic amount of money so that the enthusiastically pledged extra operations and specialist appointments actually happen.

DHBs, mainly due to unrealistic funding for the task at hand, have run combined deficits stretching into the billions, and care has been downgraded because of it.

With an ageing population placing increasing strain on the badly stretched health workforce, let alone the demands of the pandemic, doctors, nurses and patients all need a helping hand.

In fact, with inflation galloping ahead at levels not seen in recent times, any assistance at all to help Kiwis keep pace with the rising cost of living would be welcome.

Some have already received tax credits and all benefit directly or indirectly from moves to reduce petrol prices, but the factors driving inflation remain in place and food and fuel remain stubbornly expensive.

Major funding for police has been announced to make people feel safe outside their homes, but financial pressure is making many families feel insecure at home.

Anything extra to make life easier would be a welcome boost: the politicians can be left to argue whether that should be in the form of a hand-up or a hand-out.

 

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