Two weeks out, Labour is positioning its first budget as a noble quest story in which it saves the nation from under-funding whilst also being super-responsible. But with questions about how it will try match its spending to its rhetoric, it feels more like a plot-twisting mystery

Budgets typically make for dry reading. From a speech that opens with a motion to pass the Appropriation Bill (yawn!) to appendices full of complex numbers, they're not exactly page-turners. Yet this year's Budget promises to be something of a pot-boiler packed with twists and turns and mysteries to be solved.

In his first Budget, Finance Minister Grant Robertson will have cast himself as the hero on a noble quest. Having fought his way past the evil magician Joyce, avoided the illusion of the fiscal hole and won a u-turn  - in the nick of time! - after his leader Captain Jacinda's foolhardy decision to explore the 'Swamp of CGT in the First Term', he will want to show New Zealanders they are on the verge of the promised land - the realm of wellbeing and sustainability.

He will want voters to see his funding choices as heroic, not his assumptions.

So speaking to a business audience this week in Auckland he said he's here to future-proof the economy and rebuild public services. He would be faster than a speeding bullet and leap tall... sorry, he will both invest what's needed to transform the economy and stay within Labour's Budget Responsibility Rules.

But for those of us looking forward to the new Budget release with anticipation, question abound. The plot feels more like a mystery than a heroic quest story.

Has Labour designed a budget in Opposition that now leaves it little room to respond to new and unfolding issues, such as rotting hospitals and demanding public service workers? That seems to be almost certainly true. So the question becomes what hard choices have been made to patch over the fact there's not enougn money? Or has increased revenue come to Labour's rescue in any significant way?

We got some clues at the weekend on the politics programmes, even if they were somewhat conflicting.

Health Minister David Clark told Q+A that Labour's promise of cheaper doctor's visits – down to $10 on average – would need to be "phased in". It campaigned on delivering that policy on July 1 this year, yet Clark now says delivering its coalition partners' policies means this policy will take a back seat.

Also significantly, Social Development Minister Carmel Sepuloni told Newshub Nation the Budget would address "income adequacy". Sepuloni was determined not to give away much about how this story ends, but she did seem confident enough to stress Labour's view that benefit incomes were insufficient. She used the phrase "income adequacy" a couple of times

So how might Labour make income for beneficiaries more "adequate"? The simple answer and the one called for by the past two Childrens' Commissioners, researchers such as Jonothan Boston and their coalition partners the Greens, is to simply give the poorest New Zealanders more money. Increasing benefits. For all the hand-wringing by the Talkback crowd about money being unwisely spent on cigarettes and loose living, the research suggests it's a pretty effective way of tackling poverty, as Labour promised it would in the election campaign. 

But it's expensive. With its Families Package already in place, can Labour afford to introduce this plot twist in this Budget? There are other ways to address that inadequacy. For example, abatement rates could rise, allowing people on benefits to earn more before their payments start to be cut. However it's done, Sepuloni has created a level of expectation that Labour may have a surprise ending up its sleeve.

Yet how does that square with Clark's Dickensian performance on Q+A, where he said 'woe is us, we can't even afford to keep our existing promise...'?

Perhaps the biggest mystery for me, however, is how Labour squares these choices with its overall political narrative. And why it's so determined to stick to its borrowing promises above all else.

Labour came to power as something of a Cassandra, wailing at the crises in housing, health and education. Since it took power, it has been making the case that the public sector is in much worse shape than it thought and the cuts deeper. The mould and rot at Middlemore Hospital has become something of a shorthand for that state of affairs.

The key message Labour has been sending out in recent months is that they knew things were bad, now they've discovered they are worse.

Yet their response to that? Stick to the plan. Stay the course. Double down. Don't adapt. Don't re-think. 

They are choosing to break their promise on cheaper doctors' visits, rather than their promise of getting debt down to no more than 20 percent of GDP by 2022. Robertson even declared this week that he will deliver a surplus in his first Budget. 

All of which leaves Labour facing a key question: Why run a surplus when crises abound? Why not borrow more, if the problems are as deep and serious as you say? Why not show your economic management chops by adapting to circumstances?

Labour's problem is that it is now in danger of undermining its economic credibility in the opposite way from what it fears. It seems to be in the grip of the terror of past elections lost, of ghostly critics appearing at the end of Robertson's bed crying "tax and spend Labour! Tax and spend Labour!".

Labour seems determined to show its fortitude and ability to be responsible and disciplined managers of the economy no matter what. Yet responsible economic managers respond to changing circumstances. If you spend months telling us things are so much worse, but then don't change the plan accordingly, well, you look irresponsible.

If there is a crisis to be fixed, make the case to fix it and spend what needs to be spent.

So I wait eagerly to see if there's a twist in the tail. Are there National schemes to be cut to allow for a bigger response than expected? Has Robertson learnt from English his trick in recent years of ensuring a big Budget day surprise? Can Labour convince us that its response is commensurate to critical need it has warned us of for so long? 

We'll all find out, dear reader, in precisely two weeks when this pot-boiler is launched on May 17. Only then will we know how this story ends.

Comments (1)

by Alan Johnstone on May 09, 2018
Alan Johnstone

"All of which leaves Labour facing a key question: Why run a surplus when crises abound? Why not borrow more, if the problems are as deep and serious as you say?"

Obviously because to not do so would cost them the 2020 election. It's that simple, they made a pledge and need to stick to it.

 

 

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