Petulance & Policy Paralysis

One can only hope Sir John was out hitting golf balls and Mr. English stomping round in the mud. Such was the embarrassing nature of Simon Bridges’ speech on budget day, the former leaders would have been shocked to see the extent the leadership capabilities of their former party had fallen. Bridges was supported of course by a cast of sneering MP’s just as culpable in behavior that would not be tolerated in a primary school class room.  While the Prime Minister, relentlessly positive as always, managed to retain the moral high ground, in the most part, the scenes of red and blue in their trenches jeering across the room left no surprise as to why the faith and engagement in our democracy is dwindling.

This may well be considered the norm, and I’m sure there has been worse performances in the house of our elected officials, yet the constant bickering among a room full of intelligent individuals is in no way endearing to the people they are supposed to represent and is almost certainly a handbrake to productive decision making.

Anyway, it’s unlikely that our politics will shift drastically away from its partisan roots, even though a little bit of companionship in the house could actually help the government tackle the difficult long-term issues New Zealand is facing.  

Leaving our MPs to their quarrels, let’s Instead have a quick look at some of the outcomes from the budget.

Budget 2018

The ‘transformation’ promised by this government looks set to wait as the budget attempts to patch over some of the holes left in the 9 years previous. That is the line we are sold by Grant Robinson anyway. In the lead up, it was billed as boring, and in fairness, the mini-budget released in December made it difficult to be anything but. What we did get is a patchwork of mostly predictable announcements that fail to engender any sort of optimism that this government will be any different to the economic caretakers we have had over the last 30 years.   

Infrastructure spending has been in the spotlight in the lead up, with warranted criticism of the way National prioritized paying down debt over funding core services. For all the talk, this standard is equally the new government’s to bear. The growing lability of health care and Super payments, along with the refusal to close the loopholes that drive housing speculation and private sector foreign debt have hamstrung any ability we may have had to increase our debt levels to fund our infrastructure woes. What these means is the new government will follow the same track laid by National and their Budget Responsibility Rules, running surpluses to pay down debt which will leave little to prop up our ever-depreciating infrastructure.

The state housing sector looks to be happy with an announcement that another 6400 state houses will be built. Some clever accounting has allowed the $4.03 billion cost to be predominantly funded through a bond issue from Housing NZ, keeping it off the government’s balance sheet. Intervention is well overdue considering state housing stock per capita is at its lowest level since the 1950’s. This budget highlight illustrates perfectly government’s inability to borrow on its own account.

Much of the wash up has looked at the $850 million allocated to capital spending in health. Treasury’s 2018 Investment Statement estimated that DHBs required $14 billion of spending over the next 10 years, so while an immediate boon, it does nothing to address future cost increases, and again highlights the role generating surpluses in future has to play in finding this $14bn.

The same can be said about education. The lion’s share of the spending, $334 million, goes toward much needed capital expenditure, however the 1.6% increase in operational funding fell well short of the estimated 4% required, especially considering how hard Labour had pushed for National to increase funding in opposition. Their plans to hire 1500 more teachers also seems equally shortsighted considering teachers are currently leaving the profession in droves due to pay conditions which look unlikely to improve.

Unfortunately, it is the same old story. Money talks and for all the gusto about a new, progressive government, we have a budget that simply looks like another in a long line that we have seen from the blue team. Sure, some of the signs hint at a willingness to look at the long term, the boost in R & D funding is welcome, and their plan to consider measuring wellbeing rather than focusing solely on GDP to give a more holistic view of the economy is an interesting proposition. Unfortunately, these are only titbits and in no way live up to the bold promises that sought to drag our country into the 21st century.

At its core we have successive governments with very little room to move because of the legacy of decisions made in the past that there is no political will to change. A NZ Super regime that wastes taxpayer funds on people who don’t need it, a foreign debt level that limits how much debt the government itself can raise without credit rating consequences, and no determination by Establishment parties to confront these problems that prevent the State sector being proactive in ensuring economic progress. National’s response was to use immigration to generate growth, albeit that did little for per capita incomes. Labour’s approach so far is to blame the last government.

Andrew Courtney - [email protected]

Showing 2 reactions

  • Oliver Krollmann
    followed this page 2018-05-21 16:11:19 +1200
  • Kevyn Miller
    commented 2018-05-20 10:05:48 +1200
    Nationals response in its was to promote the myth that the Canterbury earthquakes were a fiscal and economic negative when they actually were responsible for attracting $30bn of foreign capital investment into the NZ economy . That this myth was reinforced by most bank economists resulted in investment sentiment being positive about future growth rather than being negative we all know what happens to rock stars when they burnout.