Budget 2019: Tinkering or Transformation?

The Wellbeing Budget has finally arrived. But has it lived up to the hype? 

The short answer is no. The Budget has delivered a lot, probably more than many expected. However, from the outset the Government has restricted itself to tinkering at the edges of its existing spending programme. Real change is unlikely without making some big calls to redirect money where it is most needed. 

Some positive signs for Mental Health and Child Wellbeing

Mental Health and Child Wellbeing have both received big injections in this Budget. Mental health has received an extra $1.4b and Child Wellbeing $3.5b over the next four years. The new frontline mental health service and cuts to school fees in poorer communities will both be welcomed. 

However, time will tell whether this new money ends up in the hands of the people that need it most. Two key examples are welfare reform and addiction services. Benefit changes will have fallen well short of what child poverty advocates have called for, with most of the money in the Child Wellbeing package going into the Education system and Oranga Tamariki, rather than into the hands of the poorest in our society. It looks a little bit like this Government doesn't trust poor people to make good decisions with their money. And we also know that around $150m per year additional funding is needed for addiction services, but only about 10% of that has been allocated under the Mental Health package. 

It looks like there will be more to do if we really want to prevent our social problems rather than just put the ambulance at the bottom of the cliff. 

Other than that... 

Other than those it is lean pickings. The Budget contains a lot of tiny initiatives, many of which are business as usual but have been shoehorned to fit into one of the Government's "priority areas". Some of the links are pretty dubious:

  • pretty much anything to do with education has been put into the Child Wellbeing category (which has been branded as a child poverty package but ain't);
  • funding for the Royal Commission on abuse in state care appears in the mental health package; 
  • subsidies to film companies apparently "support innovation";
  • eradicating Mycoplasma Bovis and improving biosecurity will apparently "transform the economy"; and 
  • Kiwirail has received a much needed $1b injection of capital but this is dwarfed by $1.7b on aircraft. 

You get the picture. The fact is that the business of Government trundles on, no matter how each government chooses to dress it up. Unless an administration is prepared to really question business as usual, a government has to fund new priorities out of the leftovers and scraps. This means that transformational change will take years, which isn't really the point of transformational change. 

Transformational Change Means Questioning Business as Usual

What this Budget tells us is unless this Government is prepared to be bold and question business as usual, they won't deliver truly transformational change. The fact is that spending pressures just chew up too much of the pie, so there isn't anything left over to make much of a difference. Here are a few examples of the sort of bold changes that would really make up a transformative Wellbeing Budget:

  1. New spending for NZ Superannuation in this budget alone was about $900m. Over four years that is equivalent to the entire Child Wellbeing package. Funding NZ Super isn't that difficult in the good years (like this one) but come the bad years younger generations might start questioning whether that is really adding to the country's "Wellbeing". The Opportunities Party have suggested means testing NZ Super and using the money to really help families with little kids thrive. This would not only make make NZ Super sustainable and be a fantastic investment in our country long term. 
  2. New spending for our Health system in this budget is about $1b. This dwarfs anything else in the budget, and with the exception of the improvements to mental health services, we will see very little new services as a result. This is just the cost of keeping an unsustainable system going. The health sector will require reform, it is just a question of when, not if. 
  3. Given we face these costs rising into the future we either need to make changes or find new forms of taxation to cover them. Lifting income taxes would just make younger generations pay for the profligacy of older generations. We need to find a way to tax wealth, particularly the equity tied up in our overinflated housing market.  

Photo credit: Lenore Edman