Budget 2022: The security state | Denton’s

Finance Minister Grant Robertson’s 2022 Budget is titled a secure future. Coming as it does at a time of considerable financial and geopolitical insecurity, its strong assertions sit on shaky foundations.

Robertson yesterday cited deliverability as one of three key criteria, alongside value and alignment, for assessing the merits of any initiative put up by government. But apart from that one explicit reference, the concept did not feature either in Robertson’s commentary or in the substance of some of the Budget’s most significant policy announcements.

With $11.1 billion for operating costs and $1.3 billion for capital expenditure spread over the next two years, health spending is the big ticket item.

As expected, the significant increase is in part driven by costs associated with disbanding the 20 District Health Boards and replacing them with two national agencies, Health New Zealand and Te Mana Hauora Māori.

Those costs include money to “clear the deck”, as Health Minister Andrew Little put it – to wipe the DHBs’ accumulated deficits and allow the new system to start with a clean slate.

While this will keep the books tidy and the accountants happy it is effectively money that has already been spent: so, a big headline number, but it won’t increase the number of hip replacements or speed up access to cancer treatment.

Another ostensibly large number is the $191 million increase to Pharmac’s budget over the next two years.

Item won’t impress the pharmaceutical industry, nor the patient advocates calling for New Zealanders to have access to cancer treatments and other drugs that are standard across the Tasman and in the other countries Robertson is keen to compare us to when it comes to inflation or unemployment numbers.

Overall, the funding for health might be secure, but the outcome of the flagship reform program remains less certain. Both Robertson and Little promised the new structure would end the so-called postcode lottery, and ensure, in Robertson’s words, that “wherever you live, you will get good healthcare”.

A good structure, well-funded, is a necessary prerequisite for success. However, it is not on its own sufficient. Neither Minister addressed the question of whether the capacity to deliver (ie the doctors and nurses) was available and if not, as the health sector itself claims, how workforce capacity issues will be solved.

The budget forecasts immigration will be positive over the coming year, but that is at odds with what people across a range of industries are saying.

New Zealand currently has an estimated shortfall of 4,000 nurses, which is hitting aged care and iwi healthcare providers particularly hard. Australia offers migrant nurses higher wages and immediate residence. SW Little and Robertson are taking a risk that the Government’s shiny new vehicle for delivering healthcare will be left driverless on the side of the road.

It’s a similar story with public housing.

Grant Robertson acknowledged that the extra $150 million for public and transitional housing is really only enough to maintain the current course, and that the Government – ​​like anyone else trying to build or renovate a home – is facing increasing cost pressures.

Grant Robertson, whose portfolios include racing, is said to like a small wager.

But his decision to introduce a temporary payment of $87 a week for everybody earning less than $70,000 a year who does not qualify for the winter energy payment is a big bet – for a number of reasons.

Robertson says 81 percent of New Zealanders will receive one of these two payments – for the three months from 1 August, anyway. Robertson is betting structuring the “cost of living payment” as he has done, rather than introducing broader tax cuts or changes to the tax thresholds, will provide the squeezed middle with sufficient support without encouraging inflation.

He’s also betting that wages will increase in line with inflation between now and 1 October, when the payments are set to cease. That’s what Treasury is predicting but, as Robertson acknowledged, these are volatile times.

The Opposition is right to call it a band-aid solution.

Band aids are, of course, not the radical surgery traditional Labor governments have been expected to deliver – but traditional Labor finance ministers probably aren’t expected to boast about their Triple-A credit ratings, or to skite that they will get the books back in surplus faster than National did following the GFC.

If any further reminder was needed that Budgets are political, as much as financial, documents, Robertson’s several comparisons between his careful economic stewardship and the performance of the National-led government between 2008 and 2010 delivered it.

A year-and-a-half out from the next General Election, the hunt for the mythical median voter is on.

A few surprises

For a moment it was 2019 all over again. An announcement that $349 million would be spent on the rail networkincluding 29 mainline locomotives and 140 wagons to help move more freight by rail, reduce emissions and alleviate road congestion, and plans for a feasibility study into a dry dock in Northland had more than one observer wondering whether former Deputy PM Winston Peters or the erstwhile Prince of the Provinces Shane Jones had sneaked in and altered the press release.

The two sons of the North would have been less pleased with the news that there is to be another(!) study into the feasibility of Manukau Harbor as a location for a future port. When a 2020 report by Sapere (one of several commissioned by various groups both for and against closing Auckland’s container terminal) recommended a new port at Manukau, transport company director Chris Carr said the port’s west coast location would make it New Zealand’s first shipless port, While Jones invoked the sinking of the Orpheus in 1863, in which 189 people died, as reason to not build a port at Manukau Harbor and prophesied “that a thousand years will pass before a new port will ever be located in Manukau Harbour.” That was then, now another feasibility study is to begin.

Government is eyeing up a move into the private equity space via a new Business Growth Fund that Stuart Nash, Minister for Economic & Regional Development and Minister for Small Business says will help fill a gap in the capital market for SMEs that require growth capital not available through current market providers. The Budget has set aside $100 million over the coming year for Crown investment as a minority shareholder in a Business Growth Fund, alongside private banks. Whether the big four Australian-owned banks, who continue to display an overwhelming preference for lending on houses, will be keen to join in remains to be seen.

While Robertson announced the formation of a Justice cluster, which incorporates the Ministry of Justice, Police, Corrections, the Serious Fraud Office, and the Crown Law Office; and a Natural Resources cluster, which incorporates the Ministry for the Environment, the Department of Conservation, and the Ministry for Primary Industries, describing them as a way to break down inter-agency silos, Carmel Sepuloni announced the establishment of the Ministry for Disabled People, which she will oversee. Like the health reforms, it could be seen as an attempt to generate better outcomes simply by introducing a new structure.

Something we expected to see

Environment Minister David Parkerwho is driving the appeal of the Resource Management Act 1991 (RMA) and its replacement with three new Acts (the Natural and Built Environments Act, the Strategic Planning Act and the Climate Change Adaptation Act) welcomed the announcement of a $178.7 million funding program to implement the planned systemsaying inadequate funding for the implementation of the Resource Management Act in 1992 almost guaranteed its failure.

The Environment Select Committee last week considered an exposure draft of parts of the Natural and Built Environments Bill. The Government expects to introduce the full Natural and Built Environments Bill and Spatial Planning Bill to Parliament later this year.

odds and ends

  • Supporting the Living Wage at Te Papa: $480,000 over four years
  • NZ Screen Production Grant: $60million over one year
  • NZ Screen Production Grant for International Productions: $477m over four years (a tagged contingency, ie further work is required for funding to be finally approved)
  • Pacific Emergency Budget Support: $75m over one year
  • Affordable Housing Fund: $221m over three years
  • Department of Internal Affairs “funding to progress Ministerial policy priorities in 2022/23”: $1 million
  • establishment of NZ Income Insurance Scheme: $60million over four years

How others see it

National Leader Christopher Luxon called it the “Backwards Budget”, saying that the books are going backward, more and more Kiwis are falling further behind, and New Zealand simply cannot afford a Labor government.

ACT leader David Seymour again beat Luxon to the punch, calling it the “Brain Drain Budget”. While polls taken during the past few months have seen support for National increase at ACT’s expense, there is no doubt Dancing David is a lot quicker on his feet than Luxon and his clever quips from him make the Nat look ponderous by comparison.

Te Pāti Māori Co-leaders Debbie Ngarewa-Packer and Rawiri Waititi have said that today’s budget is significantly below what was expected for Māori, calling it a bunch of crumbs. Robertson was brusque in answering a similar question in today’s briefing, pointing to the new spending on Māori health, while Associate Health Minister Peeni Henare declared he was proud of what today’s budget had achieved for Māori.

The Greens had a broadly positive reaction to today’s budget. Co-leaders James Shaw and Marama Davidson both got a piece of the pie with further funding announcements for addressing climate change and for the prevention of family and sexual violence. However, even Shaw admitted in Parliament earlier this week that we should be going further and faster to counter climate change and expressed frustration at “the extremely slow pace of change in the agricultural sector”. Many of the Party’s supporters will be thinking similar thoughts, but in much tougher terms.

in conclusion

The next opinion polls will tell us whether today’s Budget has done much to help secure the Labor Party’s future with about 18 months to go until the next general election (with a potentially noisy set of local body elections this coming October). Of course, there’s another Budget to come before then, and the wily Grant Robertson has left sufficient funds in the Government kitty to support an election-year spend-up – within limits.

The pandemic fatigue felt by most New Zealanders, the inflationary and other pressures squeezing middle New Zealand – Mr Luxon’s newly-adopted constituency – and the progress (or lack of it) with the policy revolution unleashed by Labor in health, local government, and so many other areas: it’s these factors that will ultimately decide whether Jacinda Ardern, Robertson and their colleagues have a secure political future to look forward to as 2022 turns into 2023.

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