Pre-election Economic and Fiscal Update – economy “better than predicted”

The Pre-election Economic and Fiscal Update has been released today. Minister of Finance Grant Robertson’s take on it:


  • PREFU shows economy doing better than forecast
  • Unemployment to peak at 7.8%, down from 9.8% forecast in the Budget
  • Year-to-June accounts show tax revenue, debt and OBEGAL better than forecast
  • Global forecast downgraded as COVID-19 second waves and uncertainty grows
  • Balanced plan to support critical public services, manage debt and reduce the deficit caused by COVID-19

The Pre-election Economic and Fiscal Update released today shows that the near-term economic recovery has been stronger than the Treasury and many economists predicted at the May Budget, as the economy bounced back strongly out of lockdown.

“The Treasury now forecasts the unemployment rate to peak at 7.8%, down from 9.8% forecast in the Budget, because the economy is stronger than expected. That compares to an expected peak of 10% in Australia, while countries like the US and Canada have already recorded unemployment peaks above 13%,” Finance Minister Grant Robertson said.

“The unaudited Crown accounts for the year to 30 June 2020 back up the evidence of a rebounding economy, with core Crown tax revenue of $84.9 billion coming in higher than the $82.3 billion forecast, indicating more activity than expected.

“Net core Crown debt was 27.6% of GDP at 30 June, compared to the Budget forecast of 30.2%, and the OBEGAL deficit of 7.7% of GDP at 30 June was lower than the 9.6% forecast.

“These are signs that the New Zealand economy is robust, and that our plan to eliminate COVID-19 and open up the economy faster is the right approach. We can see this in the forecasts, with the New Zealand economy predicted by the Treasury to grow by an average of 4.2% across 2021 and 2022, compared to Australia at 3.6% and the US at 3.5%.

“The Treasury – similar to other economists – initially forecast June quarter GDP to fall by about 23.5% in June from March. In today’s forecasts, the Treasury has reduced that to 16%. All this goes to show is that forecasting month-to-month, let alone years in the future, is incredibly difficult with such an uncertain global environment and an unpredictable virus.

“However, global headwinds and this 1-in-100 year economic shock caused by COVID-19 will have a long-term effect on the Government’s books.

“The forecasts illustrate our balanced plan to manage debt and reduce the deficit caused by COVID-19, while protecting our investment in services like health and education.

“COVID-19 is hurting economies around the world but because New Zealand went into this with low debt and a growing economy, we will come out better than other advanced countries,” Grant Robertson said.

“Policies like the Wage Subsidy, business tax refunds and small business cashflow loans protected jobs and kept businesses going. We’ve also invested to secure PPE and ventilators, and make sure our testing and contact tracing systems are world-class. Taking on debt to fund this response is the right thing to do as we fight COVID-19.

“There is no free lunch here.These measures require significant investment. It has been necessary to use the Government’s strong financial position to do this.

“What counts is our strong track record. Before COVID-19, despite constant urging to the contrary we stayed disciplined with our spending and reduced debt below 20% of GDP while successfully investing in critical public services.

“Our strong starting position that means even at its peak of around 56%, New Zealand’s net debt will be considerably lower than other economies around the world – advanced economies went into COVID-19 with net debt averaging about 80% of GDP.

“The PREFU’s long-term projection model shows debt reducing to 48% of GDP by the end of the projection period. The difference between debt of 56% and 48% at the end of the projection period represents $46 billion less debt than if debt just remained at its peak.

“The projections show the deficit caused by COVID-19 reduces steadily each year from 10.5% of GDP this year, to less than 1% of GDP by June 2028.

“The PREFU also shows the benefit of locking in low interest rates for the long-term debt that has been used to fund the response, with annual core Crown finance costs forecast to reduce by around $800 million over the next four years.

“Because the Government can borrow for 20 years or longer at rates below 1%, it makes sense to lock these in now to fund the response before interest rates rise. Because the Treasury has already been able to secure more funding at lower rates, and because the Government’s cash position has improved since the Budget, the Treasury today announced it has reduced its debt programme over the next four years by $10 billion.

“There are challenges ahead, but we have a five point plan to grow the economy, support businesses and seize the opportunities created by our world-leading COVID response.”


While the economy may not be as bad as predicted the effects could have been delayed and may be yet to bite. Or not.

Labour launch Jacinda/Covid campaign

Labour launched their election campaign yesterday. For obvious reasons Jacinda Ardern was prominent. A lot of confidence was on display – there were comments that they looked like they were celebrating already.

RNZ: Labour launches re-election campaign with $300m plan to create thousands of new jobs

The Labour Party has launched its re-election campaign today with a promise to invest $311 million to help unemployed New Zealanders into jobs.

The government’s existing Flexi-wage scheme – a wage subsidy to help employers hire those on a benefit at risk of long-term unemployment – would be revamped and expanded under a re-elected Labour Party, with the average amount a business can access to hire a worker more than doubling.

The party believes scaling up the scheme could enable 40,000 people to be employed.

Jacinda Ardern, speaking at the launch today, said $30 million will also be ring-fenced to help unemployed people start a business through an expanded Flexi-wage self employment programme, which will provide the equivalent of the minimum wage for up to 30 hours a week.

Trying too address things that the Government has been trying to address for the last few months. Unemployment could be a big issue as the campaign progresses and the wage subsidies run out.

A lot of us would prefer not to become unemployed in the first place.

Martyn Bradbury: Labour Party Campaign Launch tone deaf

So the Labour 2020 Election Campaign Launch was a tad disappointing.

We have just endured the worst pandemic for a century, there is fear and there is genuine worry about what happens as early as September and what was the tone Labour struck with their launch?

A slam poem that came across as a religious sermon mixed with an arts festival variety show which is not what worried NZers are wanting right now.

They are wanting to know how the bloody hell we get out of this mess.

Singing and dancing can be done once we’ve won folks, but the pandemic has reset everyones reality and the immediate future in a way not seen outside of World War 2.

Labour’s variety show came across as tone deaf and smug.

Labour are celebrating before they’ve won.

Labour’s lack of major policies and lack of ambition (except their ambition to win) is being noted.

Henry Cooke (Stuff): Labour launch an extremely centrist campaign

This was Labour’s campaign launch and first real policy release. Finally, after three years of only promoting things that could pass the Winston Peters’ test, Ardern had a chance to release some properly Labour Party Labour policy, the kind of “transformation” stuff she had been itching to do all term but couldn’t get away with.

Instead, she launched a hiring subsidy so centrist that the National Party already built it in 2012, albeit in a different form. And it isn’t even new spending: The whole $311m package comes from left-over money unspent by the extension to the wage subsidy.

The hiring subsidy may well be good public policy.

But what it isn’t is particularly Labour. BusinessNZ were effusive in their praise for it, and even Judith Collins was only able to muster a “we did it first”. This was Ardern’s first chance in a long while to set out what her party stood for, outside of the binds of Winston Peters, and she released a policy that you would probably get 119 votes for in Parliament. Indeed, it’s hard to see why the Government wouldn’t just do this policy before the election, if it was such a good idea and the money is just lying around unspent.

It makes total sense for Labour to campaign from the centre. Centrism is probably the route to keeping that huge swath of voters Ardern won over during lockdown on their side through September 19. The party’s base loves Ardern and hates Collins enough that they would probably be out door-knocking if Ardern announced a business tax cut next.

But voters do deserve a contest of ideas, and not just one fought between the Green Party and ACT, who have put out policies that really tap into the ideologies of each party.

There is no doubt that Ardern is a very good image marketing politician.

But she seems very unambitious when it comes to delivering on transformation, progressiveness, reform, anything much apart from promoting a popularity contest.

Even The Standard did little to promote Labour’s launch. A few hours afterwards a post appeared: Jacinda’s speech to the Labour campaign launch

And comments there were generally fairly muted and mixed. Maybe they believe they can coast to victory.

Perhaps Muttonbird summed things up:

Except apparently Jesus actually did a bunch of stuff for the poor.

Ardern: “When people ask, is this a COVID election, my answer is yes, it is,” 

Campaigning a lot on what they have done (recently), and little on any plan or vision for the future.

For Labour this election is all about three things – Jacinda, Jacinda, Jacinda.

National’s party list

National have announced their party list for the 2020 election in September. There is nothing remarkable about it. The top 20 are fairly similar to their current rankings.

National’s 2020 Party List:

1Judith CollinsPapakura
2Gerry BrownleeIlam
3Paul GoldsmithEpsom
4Simon BridgesTauranga
5Dr Shane RetiWhangarei
6Todd McClayRotorua
7Chris BishopHutt South
8Todd MullerBay of Plenty
9Louise UpstonTaupo
10Scott SimpsonCoromandel
11David BennettHamilton East
12Michael WoodhouseDunedin
13Nicola WillisWellington Central
14Jacqui DeanWaitaki
15Mark MitchellWhangaparaoa
16Melissa LeeMt Albert
17Andrew BaylyPort Waikato
18Dr Nick SmithNelson
19Maureen PughWest Coast-Tasman
20Barbara KurigerTaranaki-King Country
21Harete HipangoWhanganui
22Jonathan YoungNew Plymouth
23Tim MacindoeHamilton West
24Kanwaljit Singh BakshiPanmure-Otahuhu
25Paulo GarciaList
26Nancy LuList
27Dr Parmjeet ParmarMt Roskill
28Agnes LoheniMangere
29Dale StephensChristchurch Central
30Alfred NgaroTe Atatu
31Matt DooceyWaimakariri
32Stuart SmithKaikoura
33Lawrence YuleTukituki
34Denise LeeMaungakiekie
35Simon O’ConnorTamaki
36Brett HudsonOhariu
37Simeon BrownPakuranga
38Ian McKelvieRangitikei
39Erica StanfordEast Coast Bays
40Matt KingNorthland
41Chris PenkKaipara ki Mahurangi
42Tim van de MolenWaikato
43Dan BidoisNorthcote
44Jo HayesMana
45Katie NimonNapier
46Catherine ChuBanks Peninsula
47Hamish CampbellWigram
48David PattersonRongotai
49Lisa WhyteNew Lynn
50Rima NakhleTakanini
51Liam KernaghanTaieri
52Bala BeeramKelston
53Lincoln PlattChristchurch East
54William WoodPalmerston North
55Nuwi SamarakoneManurewa
56Mark CrofskeyRemutaka
57Jake BezzantUpper Harbour
58Mike ButterickWairarapa
59Tim CostleyOtaki
60Nicola GriggSelwyn
61Christopher LuxonBotany
62Joseph MooneySouthland
63Penny SimmondsInvercargill
64Tania TapsellEast Coast
65Simon WattsNorth Shore
66TBCAuckland Central
67TBCRangitata
68Adrienne PierceList
69Senthuran ArulananthamList
70Sang ChoList
71Rachel Afeaki-TaumoepeauList
72Trish CollettList
73Ava NealList
74Katrina BungardList
75Shelley PilkingtonList

Most list candidates and quite a few electorate candidates will be struggling to get in unless National’s support improves support markedly. An on polling National will do well to get half of that list into Parliament.

This term they got 56 MPs elected with 44.45% of the vote, but recent public polling ranged from 25-32%.

On current polling a number of candidates have no show of getting in unless they win their electorates.

Interesting to see Chris Luxon at 61. He is sometimes toured as a leaderr of the future, but after the Muller experience future caucuses should be cautious about parachuting in someone with little political or political media experience.

RNZ Leader interviews: Judith Collins – ‘I’m always very confident, particularly when I know I’m right’

Collins is still shy of a month into the job but in her media blitz she and her arched eyebrows are everywhere, along with the party slogan “Strong team, More Jobs, Better Economy”.

Is the tagline “strong team” verging on the comedic though, when you look back at the past few horror months for National: a rolling maul of resignations, sackings and leadership changes?

“Look at our front bench. Look at it,” Collins says in defence.

Stuff: National Party announces list of MPs and candidates for upcoming election

On National’s current polling, many of the party’s existing MPs could lose their seat in Parliament. MPs Alfred Ngaro and Jo Hayes appear to be at particular risk after being ranked down the list.

Two candidates – Nancy Lu and Dale Stephens – have entered the list above existing MPs. Lu, a high-flying accountant who was born in China, has been parachuted into 26 on the list.

National Party president Peter Goodfellow said that Lu had been placed so high on the list because she had the capabilities the party was looking for.

Collins said many of the promising new candidates in safe seats, such as Luxon, had been grouped together down the list.

Ngaro, who is running against Labour minister Phil Twyford in Te Atatū, has dropped from number 19 in the caucus list, to 30 on the list – the only MP to drop from the top 20.

“Alfred has a seat to win, and it is important that we also have renewal,” Collins said.

That’s hardly a vote of confidence in Ngaro. He was 3,180 votes behind Twyford last election. Twyford has been poor as a minister but should benefit from Labour riding high.

Most people will know little to nothing about most candidates on the list. Elections are won and lost on leadership and the top handful of known MPs and candidates.

Business failure rates down

Defying some predictions (similar to the unemployment rate), business failures are down through June and July. How much of that is due to the financial support packages is unknown.

We’re still in the middle of a wild global economic storm, and things will get worse. But no one expected us to actually eradicate covid, and our points of comparison are scant. The economy is doing vastly better than anyone anticipated.

Business are bracing, and have made significant layoffs and reduced hours, but the feared wave of company collapses hasn’t yet made even the hint of an appearance. Sectors unexposed to border closures are, however, basically back to normal.

I am not sure those complaining about the health:economy trade off give quite enough credit for how a successful response for the former bolsters the latter.

These stats are telling:
-Wage subsidy payment to business that have since failed: $11m
-Wage subsidy repayments by business who found the downturn actually wasn’t bad enough for them to qualify: $317m

The first stat will undoubtedly grow dramatically once the extension (effectively a subset of the most vulnerable) expires, but that is a crazy low baseline that suggests the contagion is far less acute than feared.

The wage subsidy extension expires this month, so the crunch will likely come from September onwards. It’s impossible to predict how bad (or not bad) it might be for both job losses and business failures.

See Unemployment statistics for June quarter 2020

Newshub/Reid Research poll July 2020

The latest Newshub/Reid Research poll is great for Labour and terrible for National. which isn’t a surprise after what has happened over the last two weeks.

Greens are just hanging on ov er the threshold, NZ First is still well down in danger territory and ACT will be happy but are not picking up all the support National is shedding.

  • Labour 60.9% (up 4.4)
  • National 25.1% (down 5.5)
  • Greens 5.7% (up 0.2)
  • ACT Party 3.3% (up 1.5)
  • NZ First 2.0% (down 0.7)
  • New Conservatives 0.9% (down 0.1)
  • Maori Party 0.4% (down 0.5)
  • TOP 0.4% (up 0.3)

Newshub: The destruction of National under Judith Collins as party sinks to 25 percent

That’s a stupid but typical headline.

Preferred Prime Minister:

  • Jacinda Ardern 62% (up 2.5)
  • Judith Collins 14.6% (up 11.5)
  • Simon Bridges 5.5%

Collins is higher than Bridges ever got but still nowhere near challenging Ardern, who looks untouchable at the moment.

Jacinda Ardern still soaring as preferred Prime Minister – but Judith Collins is convinced she’ll win

The latest Newshub-Reid Research Poll was conducted between 16-24 July 2020. One thousand people were surveyed, 700 by telephone including both landlines and mobiles and 300 by internet panel. It has a margin of error of 3.1 percent.

Jacinda Ardern:

  • Performing well 85.3%
  • Performing poorly 8.2%

It would take a miracle to stop Ardern (aka Labour) from romping in this election. The only query seems to be at this stage whether they will be able to form a government on their own or not.

Judith Collins:

  • Performing well 39.5%
  • Performing poorly 30.8%

Last poll Bridges 21.6% thought bridges was performing well and 59.5% thought he was performing poorly. Collins is doing much better than thatt but National MPs have let the party down badly.

This is grim for Collins but National has had a series of crises that can’t be blamed on her. Bridges was doing badly, Todd Muller made things worse.

‘Let’s keep moving’ and the Jacinda movement

The Labour Party are launching their election campaign this weekend. It’s no surprise to see it based on Jacinda Ardern – framed as ‘Jacinda and our movement’.

But their ‘Lets keep moving’ campaign slogan seems a bit uninspiring.

Today Jacinda Ardern announced our slogan for the 2020 election campaign. Our plan to rebuild New Zealand is already in action, so on September 19 let’s keep up this momentum, and let’s keep moving

Ardern’s personality and charisma drastically turned the Labour campaign around from pending disaster to recovering enough to be able to form a government in 2017, and her popularity kept the party polling up through this term, until both soared on the back of Ardern successfully fronting the Covid-19 pandemic.

Their Facebook launch promotes the slogan and Ardern:

As does their new pinned post:

 

The slogan has been spun off their Covid recovery promotion from last month:

Getting New Zealand moving again: June 2020

We wrapped up the first half of 2020 with a busy month, taking additional steps to support New Zealanders as we continue with our economic recovery. We rolled out targeted packages to support key industries like tourism and construction, helped create jobs in the environmental and  agriculture sectors, and set out our plan to support Kiwis to retrain and upskill with free trades and apprenticeships training.

Ardern was always going to be central to the Labour campaign. If Covid remains under control recovery from the effects of the lockdown will also continue to be promoted.

An unknown is how the New Zealand economy will look in two months as the campaign climaxes and an extended voting period begins.

If there is a surge in job losses after the wage subsidies run out that could impact but the effects of that may not be clear until after the election.

Ardern will give her conference/campaign opening speech this afternoon.

ACT Party list

The ACT Party have announced their list for this year’s election. The top twenty:

  1. David Seymour
  2. Brooke Van Velden
  3. Nicole McKee
  4. Chris Baillie
  5. Simon Court
  6. James McDowall
  7. Karen Chhour
  8. Mark Cameron
  9. Stephen Berry
  10.  Toni Severin
  11. Damien Smith
  12. Miles McConway
  13. Beth Houlbrooke
  14. Carmel Claridge
  15. Bruce Carley
  16. Cameron Luxton
  17. Grae O’Sullivan
  18. Myah Deedman
  19. David Seymour
  20. David King

Odd to see two David Seymours but #19 is a candidate from Whangarei.

Brooke Van Velden (who has been an adviser to Seymour before running for Parliament) is a good and obvious choice for #2. It looks like five of the top ten are male and female, which looks different for an ACT list.

Nicole McKee is the spokesperson for the Council of Licensed Firearms Owners and has been vocal in opposition to firearms law changes since the Christchurch mosque murders.

Beth Houlbrooke (“an award-winning businesswoman, former farmer, and Chair of the Rodney Local Board”) has been an ACT candidate before and is the only candidate currently featuring on the ACT website.

Going by recent polls there is a reasonable chance of the top few on that list to get into Parliament as long as the Epsom Seymour wins his electorate again, which seems very likely.

 

Green list dominated by MPs, women

The Green Party list for this year’s election is dominated by sitting MPs and women, with co-leaders Marama Davidson and Jamwes Shaw swapping top roles and first term MP Chlöe Swarbrick promoted aheaad of longer serving MPs to number three.

The initial list promoted some activists over current MPs – see Initial Green Party list lacks gender, climate balance – and a small group of Green activists wanted to sump some MPs – see Left-wing Green faction wants to axe co-leader James Shaw, and Eugenie Sage and Chlöe Swarbrick.

But after party membership had their say on the list MPs have been reinstated up then order, with women dominating the top positions – this is curious given past Green preference for gender balance.

The revamped ranking:

  1. Marama Davidson
  2. James Shaw
  3. Chlöe Swarbrick
  4. Julie Anne Genter
  5. Jan Logie
  6. Eugenie Sage
  7. Golriz Ghahraman
  8. Teanau Tuiono
  9. Dr. Elizabeth Kerekere
  10. Ricardo Menéndez March
  11. Steve Abel
  12. Teall Crossen
  13. Scott Willis
  14. Kyle MacDonald
  15. Lourdes Vano
  16. John Ranta
  17. Lawrence Xu-Nan
  18. Luke Wijohn
  19. Kaya Sparke
  20. Jack Brazil
  21. James Crow
  22. Elliot Blyth
  23. Richard McIntosh
  24. Gerrie Ligtenberg

Tuiono has been dropped down from fifth. Current MP Gareth Hughes is not standing again (he has been virtually invisible for years anyway).

It sort of makes sense that all the MPs standing again get the top rankings, and I think Chlöe Swarbrick’s ranking is largely deserved.

But if the Greens just make the threshold they could have only one of their seven MPs as male, or possibly two of eight (their current proportion).

In the past the party was staunch in promoting gender equality but that seems to have dropped in their priorities. The lack of men up the list is a shame but perhaps the Greens have become less attractive to men wanting to make a mark in politics.

The Greens have two big battles ahead of them.

They keep pleading for more donations, saying they have insufficient funds to effectively contest the election.

And they have been polling close to the 5% threshold. Unless Swarbrick can do a deal with Labour and win the Auckland Central electorate the Greens have to make the threshold to survive – her prospects there may have figured in deciding on her promotion.

Labour are less likely to give up one of their Maori seats for Davidson, who will contest Tāmaki Makaurau. Shaw has never seriously tried to win Wellington Central off Grant Robertson.

The rest of the candidates are described by Davidson as

…young climate fighters fresh off the school strikes, new Māori and Pasifika voices, an environmental lawyer, a psychotherapist with a passion for improving access to mental health, and a first generation Latin American immigrant.

…but there are no standouts there, and most are unlikely to have much chance of getting into Parliament.

Stuff: Green Party list promotes ‘hello boomer’ Chloe Swarbrick

I think the ongoing promotion of an inaccurate retort from Parliament is trite and irrelevant to Swarbrick’s credentials as an MP, it just shows how shallow the media can be.

NZ Herald: Chloe Swarbrick gets a major promotion in the Green Party

Chloe Swarbrick’s had a huge promotion in the Green Party and now outranks two ministers and an under-secretary.

After her 2016 Auckland mayoral campaign, Swarbrick was recruited by the Greens and scraped into Parliament at ninth on the list.

She’s since made a name for herself addressing mental illness and on legalising cannabis and will go head-to-head against new National Party deputy leader Nikki Kaye for the Auckland Central seat.

The Spinoff: Green Party list ranking revealed: can this group lift them over the threshold?

Party press release: Green Party Unveils Its Candidate List For The 2020 Election

Budget – big numbers but little vision?

The 2020 budget has unusually big spending numbers due to trying to deal with the Covid-19 pandemic and associated economic crisis. Current New Zealand debt is about 20% of GDP, the budget would over double that to 50% with a reduction back to 40% forecast over the next ten years, so the target is double the relative debt.

But the budget has been slammed as lacking in vision, with a big chunk of money earmarked but not yet committed to anything in particular.

Sam Sachdeva (Newsroom): Robertson’s huge numbers fit the Covid-19 moment

The $50 billion figure tacked to the centrepiece Covid Response and Recovery Fund is in some respects a case of magic with numbers.

Nearly $14b of that had already been spent, with a further $16b laid out in the day’s Budget.

Importantly, that leaves nearly $20b of fiscal headroom for further announcements in the months leading up to the election.

Government staffers were quick to state the $50b number was a cap rather than a target, but Robertson undermined that somewhat by saying it would almost certainly be spent within the next few years.

There were still some striking omissions, however. It was little surprise the Green Party came under pressure from supporters for a lack of policy and funding wins.

…Indeed, Bridges’ canned line that the Government was “turning a $50b problem into a $140b problem” seemed underpinned by the roughly $50b of extra borrowing the last National government took out to cover the costs of the global financial crisis and the Christchurch earthquakes.

Bridges is gambling that voters’ historic concerns about debt levels will outweigh their desire for sweeping support – Kiwis faced a “tsunami of debt”, as he put it.

But Robertson’s statement that the country faced a 1-in-100 year global shock, forcing drastic measures, seemed more closely aligned to the national (and global) mood.

Ananish Chaudhuri (Newsroom): Budget’s worrying debt-to-GDP red flags

First, the prediction that nominal GDP is poised to fall by 4.6 percent this year and more the following year before starting to grow again. Unemployment is tipped to grow to nearly 10 percent. These are pretty dramatic. This is worse than the recession that followed the global financial crisis, when real GDP declined by 2.2 percent and the unemployment rate peaked at 6.9 percent.

What is even more striking is the prediction that by 2023, debt will be more than 50 percent of GDP. I am assuming this is public debt and does not account for private debt. I am by no means a deficit hawk, but this level of debt-to-GDP ratio poses risks for most nations, let alone a small island nation very much dependent on global economic trends.

This level of borrowing will certainly put upward pressure on real interest and exchange rates and counter-act to an extent RBNZ’s quantitative easing efforts. The net effect is anyone’s guess since a lot of it will also depend on what is happening to rates in other countries.

Overall, the budget much as expected but with some significant red flags in terms of the steeply increasing debt-to-GDP ratio.

Bryce Edwards (RNZ): A Budget with big numbers, but little vision

It’s a politically-astute Budget, but anyone looking for big transformative change will be underwhelmed by Grant Robertson’s Budget 2020, according to Bryce Edwards of Victoria University of Wellington.

Politically astute as in good for this year’s election campaign? Big handouts claimed by each of Labour, NZ First and Greens, with a lot more available to be announced before September.

Elements of the Budget that will be praised include the free trades training scheme, expansions to welfare programmes such as Food in Schools, and the significant increase in social housing.

Expectations of welfare and tax reforms were not met. The Wage Subsidy Scheme is rolled over, albeit with much more targeting. This continues the trickle-down approach of hoping that the provision of money to the private sector will flow through to workers who will keep their jobs. Noticeably, there has been no increase in income support.

Generally, even though the government is now spending much more money, the size of the state isn’t actually getting much bigger. For example, there’s a big focus on job creation, but not through a heavy state role.

Perhaps the most interesting element of the Budget is the $20bn of unallocated spending as part of the Response and Recovery Fund, which the government is keeping aside to make spending decisions on in the weeks and months to follow. Some will call this a slush fund, which is probably unfair in a crisis with no end in sight, where not all spending can yet be determined.

It will depend to an extent to how extra spending is announced and what it is used for heading towards the election. Greens have already been promoting the campaign benefits of what spending they say they have initiated.

Max Rashbrooke: Robertson goes for repair, not rebuild

Crises can be an opportunity for sweeping change. Many people, especially but not only on the left, have decided that the coronavirus’s economic shock, alongside pre-existing problems of environmental degradation and widespread poverty, is the perfect platform for transforming their society and their economy.

The Budget does spend extraordinary sums: $50 billion for the Covid-19 rescue fund, against the normal Budget allocation of a few billion dollars extra. But that spending goes largely into propping up existing businesses – $3.2b for extending the wage subsidy – or into existing structures, as with the extra $3.9b for health.

There are some small green (or indeed Green) shoots of transformational change. Free trades training, in construction and related areas, for two years. An extra $1.2b for rail, which could be part of a transition to a low-carbon way to live. A $1.1b for a green jobs fund designed to employ 11,000 people restoring wetlands and planting trees beside rivers. A further $20b of the rescue fund still to be allocated, of which $3b is for infrastructure.

Mostly, though, this is a measured budget.

This relative caution has several explanations. New Zealand First is understood to oppose many of the sweeping changes the Greens and Labour would like to see. Scaling up programmes is also not as easy as people think.

Stuff: Budget 2020 winners and losers

Winners:

  • Workers
  • The film industry
  • Education
  • Health
  • Transport
  • Public Housing
  • Māori
  • Corrections

Losers:

  • Debt
  • .Hospitality and Tourism (somewhat)
  • Beneficiaries
  • Media
  • Climate change
  • Police

The lack of much for beneficiaries and climate change have been particularly disappointing for the left (which is more Green territory).

Stuff (editorial): Government’s Budget a plan to navigate Covid-19

The Government has laid out its plan for getting the economy back on its feet, coupled with an assurance the country will get through the tough months ahead.

Whether it’s done enough to reassure the public will not be fully known until September’s general election.

Stuff: Parties look to nab wins from $20b ahead of election

A $50 billion Covid-19 rescue package poured out of the Crown coffers yesterday when the government revealed its rebuild plan – but it is the $20b blank cheque that has got the Opposition crying foul.

With just four months and four days until the election, the National Party has labelled it a slush fund for election bribes.

The campaign has unofficially kicked off and even New Zealand First and the Greens started singing from their own songsheets within hours of the Minister of Finance delivering his election-year Budget.

Greens seem to have used the budget to kick off their election campaign (via email):

We have now officially kicked off our Green Reset from the COVID-19 crisis with the release of Budget 2020. We’ve secured massive investment in Green initiatives which will create thousands of jobs while improving life for people and protecting the natural environment.

Voters will decide for themselves whether the Covid-19 pandemic gets sufficient priority over policy opportunism and cynical campaign boosting. It hasn’t helped that Green leaners seem to have been underwhelmed by the budget.

Perhaps there has been some big vision 0 as far as the election and means of Government and political survival.

A lot of spending but little reform (and little joy)

Those who wanted a lot of spending to be announced in the budget got that, but people wanting significant reform of tax and benefits and other social spending have been disappointed.

But there is a wild card lurking – some big announcements to come before the election?

The Covid recovery fund is a huge $50 billion which includes $36.1 billion in additional funding.

$15.9 billion is to be spend on the immediate response to try to get the economy going, with $20.2 billion put aside for future investment.

As usual Green leaders are trying to talk up their influence and achievements. James Shaw said the Budget shows what it means to have Green support in the government.

But an ex-Green MP is disappointed:

As is a Green candidate:

But I think those expecting radical reform in the budget were always going to be disappointed for several reasons:

  • There wasn’t time to work out how to do radical reform
  • There wasn’t time to consult before doing radical reform
  • The Government does not have a mandate to do major reform
  • The Labour Party aren’t very radical and don’t want to be seen as radical
  • NZ First

Budget website: https://budget.govt.nz/


James Shaw on Twitter:

Like the voice of @MaramaDavidson , who has led the @NZGreens campaign to end child poverty. Today’s Budget scales up the Food in Schools programme – which, when we were in Opposition, we fought for – from 8,000 to 200,000 students, with $218 million of new investment.

And @golrizghahraman, who has championed the rights of migrants and the refugees who will find it easier to rebuild their families after Budget 2020’s injection of $33 million into the family reunification system.

And @GarethMP, who for a decade, has pushed to get people into work insulating homes, making them warmer and more affordable. Budget 2020 puts an additional $56 million into the Warmer Kiwi Homes programme.

And @janlogie, who’s all of Government response to family and sexual violence has picked up an additional $202 million in today’s Budget.

And @_chloeswarbrick, whose work on behalf of students has helped secure a $20 million hardship fund to help students weather the pandemic crisis.

And @JulieAnneGenter
, who has helped to deliver $1.6 billion in the Budget’s infrastructure upgrade for metropolitan rail in Ack and Wellington, buses and cycling in Queenstown, Ackd’s new Skypath, as well as funding to help councils expand footpaths and roll out temp cycleways.

And, of course, @EugenieSage. It is because of her groundwork over the past two and a half years that today our government is able to scale up our investment in nature as the most essential infrastructure and the best job creator in Aotearoa.