Budget leaked

National claims to have been leaked the budget ahead of it going public on Thursday. If National have obtained a copy, that’s bad. But it is also bad that they are making parts of it public.

I can’t remember a budget leak before this.

RNZ – Budget leak: Embarrassing error or conspiracy?

A major pre-Budget bomb has dropped on the Beehive with top level Budget information ending up in the hands of the National Party.

The Prime Minister’s regular media stand-up at Parliament this morning was ticking along with questions about mental health, funding for dentistry and the Debbie Francis report when the news broke – the timing was of course no coincidence.

Jacinda Ardern was blindsided and reporters had just enough time to digest the document released by National before heading to leader Simon Bridges’ regular Tuesday question and answer session.

“National reveals Budget details” screamed the headline on the media release.

With it was a document claiming to reveal the funding for 18 policy areas for the next financial year.

It spanned major portfolios including health, defence, overseas aid, customs, Maori development and justice.

“This is not the Wellbeing Budget it’s the Winston Budget”, declared Mr Bridges.

That’s a reference to Deputy Prime Minister and New Zealand First leader Winston and a $1.3 billion spend on defence assets in National’s documents.

But Mr Bridges was a lot more reticent when asked about how National had come across the information – “cock-up or conspiracy?” asked one reporter.

One possibility is that someone within the Government deliberately leaked the material to National.

Mr Bridges talked about a “loose and incompetent” government and would not go as far as calling it a leak, so that seems less likely.

More likely is that someone has been careless with the information and it has ended up with National through human error.

The Finance Minister Grant Robertson hastily convened a media conference where he said some of the figures were right, but some were wrong.

The “major new initiatives”, he said, were not in the National Party document.

The only specific comment he made was about the defence spending, confirming it does includes the purchase of Boeing P-8A Poseidon Aircraft, which had already been announced.

But other than that he refused to say which other parts were right or wrong, or even how much of it was accurate.

The hunt for who was responsible will only begin in earnest once the Budget has been delivered on Thursday, but Treasury is already investigating.

There is actually serious financial implications of part of budgets being leaked ahead of the official release date.

And it is a serious matter if the budget has been deliberately leaked to the Opposition.

Circus politics seems to be getting worse.

Reforming public finance beyond the ‘wellbeing budget’

The Government has been consulting with ‘a group of experts’ – including Michael Cullen – on a new approach to managing the government’s finances, which could have a massive impact on future budgets.

Newsroom:  Cullen consults on massive Budget shake up

Treasury has brought in former Finance Minister Michael Cullen to consult on government budgeting as it tries to shift the focus away from surpluses

Dubbed a “stewardship” approach, it aims to take a more long-term view of public finance. A paper released to Newsroom under the Official Information Act shows Treasury has already begun work on reforming the public finance beyond the ‘Wellbeing Budget’ which will be delivered on Thursday.

The briefing notes that the current public finance system is 30 years old and may not adequately serve the needs of today’s governments. It said that the current work on the Wellbeing Budget and the Living Standards Framework will “only take us so far”, and further work was needed to fix “underlying issues with our public finance settings”.

Treasury says the approach is about moving from a “management” to a “system stewardship” approach to the public finance system. This could involve further changes to the Public Finance Act, a piece of legislation drawn up in 1989 that forms the cornerstone of public finance in New Zealand.

Finance Minister Grant Robertson told Newsroom the Government was “certainly moving forward” with the ideas in the paper.

Treasury believes the public sector is “not working well for everyone”. It singles out struggles in responding to “complex needs and issues” as well as “longer-term opportunities and risks”. It lays the blame, in part, on “a range of underlying issues with our public finance settings”.

It says the current settings encourage “silos” and a short-term focus. These settings mean it can be difficult to move funding across several years when it makes sense.

The reporting requirements placed on the Government focus on “outputs not outcomes,” and it incentivises “compliance and risk aversion,” rather than “innovation”.

Treasury said the new approach would “support better collaboration”, and place “more emphasis on the long-term to support innovation, asset management and capacity-building”.

One change being discussed would substantially alter how baseline funding is appropriated. Currently, bids for cost pressure funding is bid for on an annual basis, which Treasury says is “resource intensive”. This could change to a multi-year “defined period” bid, which would be more flexible.

Government budgets should have medium and long term considerations. I don’t think this is particularly new – the Cullen Fund was designed as a long term  means of financing superannuation as the population grew older. And many budget items are for multiple years (four years is common).

Last September, Treasury officials met informally with a panel which included former Finance Minister Michael Cullen, former ACT candidate and ex-Treasury Secretary Graham Scott, Victoria University Professor Jonathan Boston, and former State Services Commissioner Iain Rennie.

The group urged caution before changing “what is internationally a very good public finance system”.

Speaking to Newsroom, Cullen said there was merit in looking at long-term risks so long as a balanced approach was taken.

“So long as focus on the long-term doesn’t become an excuse for doing stupid things in the short-term then there’s a great deal of sense in getting that long-term focus,” Cullen said.

He said long-term risks like the costs of super and health care, combined with unexpected risks like earthquakes meant a prudent approach should still be taken.

“We are a country which faces quite significant risks that will suddenly descend upon us. We don’t have the slightest clue they’re going to happen,” he said.

Jonathan Boston told Newsroom that moving away from a narrow focus on GDP as a measure of the economy was wise.

“GDP is a flow measure; it measures the value of goods and services but it doesn’t tell you what’s happening to income distribution and to other financial measures, more particularly it doesn’t tell you what’s happening to the stocks of capital in a society or your human capital stock,” Boston said.

Reassessing how budgeting is done is a good thing. We will have to wait and see whether changes that happen as a result of this consultation turn out to be a good thing – and that could take many years to determine.

 

$150m to help youth transition from state care

In another pre-budget announcement the Government is putting $150 million to help youth who don’t have family support to transition into work.

RNZ: $150m package to help youth transition from state care

Young people transitioning from state care to independence will no longer be cut off from Government support when they turn 18.

A $150 million dollar transition support service announced today is intended as a safety net for 18-25 year olds who don’t have a family to fall back on.

Children’s Minister Tracey Martin said the new service would help some 3000 young people over the next four years.

“We know that young people leaving care often have high needs. By definition they’ve had a rough start – it is hard, it is traumatic for any child to be separated from their parents.

“The care experience young people involved in the design of the new service said that they felt lonely and isolated after their time in care and often didn’t know how to get the help that they needed.”

The minister said that young people who have left the state’s care and protection have in the past ended up with worse outcomes in nearly every key area including health, housing and incomes.

“Teenagers leaving care should have the right to expect what any young person would want – knowing there is someone to turn to if they need help; a warm bed to sleep in; some help and encouragement when it is needed.

“This service will provide that, both by allowing young people to stay longer with their caregivers and providing specialised transitions support workers whose job is to help this group.”

Oranga Tamariki has been tasked with building the service, which will employ 175 new specialist staff employed and make 60 supported accommodation facilities available by year four.

Twenty-five million dollars will go towards supporting young people live with their caregiver beyond the age of 18, and $9 million to help the transition from care to independence, up to the age of 25.

Young people were engaged with in the design of the transition service, which would largely be provided by NGOs, iwi and Māori organisations.

Making the investment now reduced the risk of personal cost to the young people and would help break the cycle of families needing state care.

Nearly 30 per cent of children in care have parents who had also been in care, Ms Martin said.

The new services include:

  • 175 new specialist transition support staff by year four providing day-to-day support to individual young people as they transition out of care
  • 60 supported accommodation places by year four for young people who need a stepping stone to make a successful transition to independent living
  • $25 million over four years to support arrangements for young people to continue to live with their caregiver beyond the age of 18
  • $9 million over four years to provide advice and assistance to individual young people transitioning from care to independence, up to the age of 25.

 

Fees-free policy “not a failure” but students threaten backlash

The Government has gotten themselves into a tricky situation with their handling of the news that their tertiary education fees-free scheme has run well under budget.

The scheme was rushed into place as soon as Labour took over the Government in late 2017.

Criticism has stung the government who are quite defensive.

RNZ:  Fees-free tertiary policy not a failure, Grant Robertson says

The Finance Minister insists the fees-free tertiary policy is not a failure, despite reallocating a sizeable part of the funding to polytechs due to low demand.

The policy – a Labour Party campaign promise – has been in place since the start of 2018 and pays for the first year of full-time study for school leavers, and for those who have done fewer than six months’ tertiary study in the past.

Initial estimates were it would cost about $350 million a year, but now about $197m (over four years) will be rediverted due to fewer students taking advantage of the policy than expected.

The government budgeted for 80,000 students when it first launched the policy, but that was revised down to 50,000 once it became apparent the uptake wouldn’t be that high.

In a pre-Budget speech to the Wellington Chamber of Commerce, Finance Minister Grant Robertson said ministers had identified about $1 billion of spending that was no longer a priority.

“One example of this was underspending on the fees-free programme due to enrolments not meeting initial forecasts. This funding … is now to be redirected to the implementation of the reform of vocational education.”

He told reporters afterwards it was “far from” an admission of failure.

“Tens of thousands of New Zealanders have benefited from this scheme, this is simply a recognition that not all of the money that was allocated for it is being used.

“And now we’ve got the opportunity to put that towards a vocational education system that’s delivering people with the skills that they need.”

But the government could have done better communicating who was eligible for a year’s fees-free, said Mr Robertson.

They could also have done a better job communicating the under-performance. They have left themselves trying to defend after the news came out.

And diverting the funds rather than communicating better to prospective students may also be a problem.

RNZ: Coalition faces ‘student backlash’ if no-fee policy revised

A student leader says many students are only at her university because of the new no-fees scheme and has warned the government not to ditch its policy.

Victoria University Students Association president Tamatha Paul warned the Labour coalition not to backtrack on its 2017 election promises to implement the scheme, or face a backlash by students.

Under the scheme, the first year of full-time study for school leavers is paid for, and those who have committed fewer than six months’ tertiary study in the past also qualify.

Labour’s campaign policy in 2017 was to introduce fees-free at the start of 2018, then gradually extend it to two years’ free in 2021 and provide three years’ free in 2024.

Ms Paul told Morning Report the scheme was proving beneficial to students.

“We know that this policy is being extremely helpful,” she said.

“We’re having conversations with students consistently, who are saying they wouldn’t have come to the university if it wasn’t for this policy, especially students coming from disadvantaged backgrounds and especially those getting scholarships who are now dedicated that money towards accommodation and living costs, instead of tertiary fees.”

So some skilful communications may be in order here.

 

 

Low uptake on fees-free scheme, could be scaled back

In 2017 Labour campaigned on there being a number of crises that needed urgent attention after ‘nine years of neglect’. It was surprising that one of the first policies they piled money into was something that seemed less urgent than housing, homelessness, poverty, mental health – they rushed in a tertiary education free fees scheme so that it would be in place by the start of 2018.

It turns out that the uptake hasn’t been anywhere near as high as predicted, so the scheme won’t cost as much as was budgeted. But the Government also seems to be considering scaling back the scheme to divert  budgeted money to more urgent needs (the so-called crises remain largely unaddressed).

Stuff:  Low enrolments sees $200m clawed back from fees-free scheme

The Government is stripping nearly $200 million from its controversial fees-free policy, after the number of people taking up the offer of a year of free tertiary education was below expectations.

Although he denied disappointment with the policy, Finance Minister Grant Robertson appeared to leave the door open to cancelling an extension of the scheme to further years of free education in 2021.

At a speech to the Wellington Chamber of Commerce in Parliament on Tuesday, Robertson said that as part of the upcoming Budget, the Government had identified around $1 billion of the lowest priority initiatives to cancel.

As part of this, $197m allocated for a year of tertiary education was being redirected to changes being made in the vocational education reforms.

Of course if they don’t have to spend everything the budgeted for for fees-free that money will be able to be used elsewhere (if they don’t want to cut government expenditure).

But what is apparent here is that a scheme rushed through as a high priority in 2017 now seems to be regarded as ‘lowest priority’.

Robertson denied the move was an acknowledgement of problems with the policy. The policy assumed a significant uplift in enrolments, which had not materialised. Robertson put this down to the strong labour market which made job opportunities good.

“When you get a period of time when you have employment being very, very low, that traditionally coincides with lower enrolments, in particular in polytechs,” Robertson told reporters, adding that people still had the option of taking up the policy if they chose.

Robertson maintained that it still remained Labour Party policy to extend the scheme for a second and eventually a third year of free education, but appeared to open the door to that happening.

“We’ll take a look at the extensions nearer the time, but I still believe the principle of making sure that people can carry on with study at university or apprenticeships  or work place training is really, really important.”

The plan for a second year of free education did not take place until the next term of Government so there was “plenty of time between now and then to make that call”.

So Robertson certainly seems uncommitted to expanding the scheme as planned.

Robertson’s pre-budget speech to the Wellington Chamber of Commerce:  Wellbeing Budget to tackle long-term challenges

Census failures and political accusations

The 2018 census has been a bit of a disaster, with the first use of extensive online responses, and a large reduction on the number of people who took part. This had led to significant delays in releasing what data they have gathered as Stats NZ has been doing what they can to fill the gaps in data.

The problems may impact on things like health funding, education planning and electoral boundary fixing.

And political accusations are flying, with National blaming the Minister of Statistics James Shaw, and Shaw and PM Jacinda Ardern blaming the last National government for underfunding the budget.

But this has been questioned – the 2013 census budget was $72 million, while the 2018 census budget was $117 million.

Planning for the census started while National were still in Government, but the actual census was done after Labour-Greens-NZ First took over.

RNZ – Census 2018: Stats NZ sets September release for ‘robust’ data

Stats NZ says it has plugged enough of the gaps in last year’s census to be able to start releasing data from September, but some data – including iwi statistics – are too incomplete to be regarded as official statistics.

Using a methodology that combines 89 percent of real census data and 11 percent of other government administrative data, Stats NZ said it now had records for 4.7 million people in the dataset.

In a statement, government statistician Liz MacPherson said the data now met the quality criteria for population structure information, meaning it could be used for planning, population-based funding for DHBs, and electorate boundaries.

“This means Stats NZ will use 2018 Census data to update the official population estimates and projections that many organisations use for their planning,” Ms MacPherson said.

Earlier this month, Ms MacPherson admitted that nearly one in seven people did not complete the census. The low response rate has delayed the data release twice.

“The release of data has been delayed twice because of the complex and careful work required to lift the quality of the census dataset,” Ms MacPherson said.

She said she wanted to make it clear this dataset was reliable, robust, and based on maths, not guesswork.

While government records helped to fill in gaps, Stats NZ said it could not be used for all the census topics and as a result some data might not be released as official statistics.

Newsroom:  Māori miss out in Census 2018

Data relating to iwi affiliation, for example, will not be available for the 2018 Census.

A lack of iwi affiliation data could have an impact on Treaty settlements.

A Te Arawhiti spokesperson told Newsroom it used iwi affiliation to build understanding of the groups it was negotiating with and to create regional profiles and help the public sector with iwi information.

The data was also a “secondary” factor the Crown considered when developing its Treaty settlement offers.

The spokesperson said Te Arawhiti would work with Statistics NZ and iwi to gather the best usable data from 2018.

Data on Māori ethnicity had been collected accurately, and would be able to be used – just not at the level of iwi.

The Government has announced extra funding, and has slammed the last Government for cutting funding.

James Shaw:  Stats Minister confirms funding for Census fix

Extra funding has been confirmed in this year’s Budget to fix issues arising from the 2018 Census and to ensure the next one is the best it can be, the Minister of Statistics announced today.

“Stats NZ has now confirmed it will provide reliable, quality 2018 census data to calculate how many electorates will be needed for next year’s General Election and to revise electorate boundaries where necessary,” James Shaw said.

“It had to delay other work and re-allocate funds to do it.  As a result there’s a shortfall of $5.76 million needed to complete the delayed work, and that’s being covered in this year’s Budget,” James Shaw said.

“There’s also Budget approval this year of $10.36 million to enable Stats NZ to get ahead of the next census. The money will develop the business case for the 2023 Census and start development work on it.

“The previous National-led Government decided to shift the Census to a mostly online survey and, at the same time, directed Stats NZ to cut costs over two census cycles,” Mr Shaw said.

Moving to a mostly online survey has been contentious. It appears that not enough effort was put into making it easy for people to still do it offline.

But the cost cutting accusations have been challenged.

The way data was collated was changing, and that rate of change is being accelerated.

Newsroom:  Annual census could replace five-year form-filling

The five-yearly national census could become an annual affair as the official statistics agency uses more of the data constantly collected by government agencies rather than rely on declining response rates from individual citizens.

The agency had been testing and refining models for use of administrative data for seven years already. It had intended to use an increasing amount of such data from the 2023 census onwards and instead accelerated its modelling processes to create a statistically robust 2018 census result, McPherson said.

Some 1.2 percent fewer people participated in the census than anticipated. Data gaps left by people not completely filling in their forms meant partial information equivalent to around 500,000 citizens was drawn from administrative data sources rather than census forms filled in on census night, March 6 last year.

“The team at Stats NZ has risen to the challenge and delivered a new way of confidently combining the strengths of census and administrative records to create the 2018 census dataset.

“There are now records for approximately 4.7 million people in the census dataset. The number of records is 1.2 percent, or 58,000 people, less than our best estimate of the population on Census Day 6 March 2018. In 2013, the official census undercount was 2.4 percent, or 103,800 people.

McPherson said the 2018 data was robust enough to allow the re-setting of electoral boundaries for the 2020 election and the population funding models used by public hospitals to determine their budgets, contrary to speculation from critics of the census process.

Change was inevitable. The transition seems to have been stuffed up.

 

Auckland rail link budget jumps $1 billion

The same day it was announced that a means of getting additional tax revenue was being ruled out – the CGT backdown – another announcement that a a project committed to will cost another $1 billion more than budgeted.

RNZ: Billion-dollar increase in cost of Auckland’s City Rail Link

The cost of building Auckland’s City Rail Link project has risen from $3.4 billion to $4.4b, it has been confirmed this afternoon.

City Rail Link chief executive Dr Sean Sweeney said a revised cost envelope for the 3.45 kilometre-long train line has been submitted to the Crown and Auckland Council for approval.

“The $1 billion cost increase on the previous $3.4 billion estimate made in 2014 reflects significant changes impacting the project in the past five years,” said Dr Sweeney.

“No-one could have foreseen the competitive pressures that have occurred in the construction industry over the past few years and the impact that has on costs, particularly for a project the scale and complexity of the City Rail Link.

“Last year, a decision was made to increase the scope of the project to accommodate longer, nine-car trains at stations. Planning today for a city that will be much bigger in the future reinforces the benefits the City Rail Link City will deliver to the way people travel, work and live in Auckland.

No one could have foreseen that increasing the scope of the project might increase the cost?

The extra cost will be split between the Government and Auckland City.

City Rail Link is now being constructed by the so-called Link Alliance – a group of six companies including Tonkin + Taylor and Downer NZ.

It said the revised higher cost came from four areas:

  • Contingency and escalation costs ($310m)
  • Construction costs ($327m)
  • Accomodating longer, nine-car trains ($250m)
  • Non-direct cost ($152m)

Auckland Mayor Phil Goff said tighter financial management will help fund the additional $500 million requested by City Rail Link Limited.

Like the tighter financial management campaigned on in the last election? Tighter still now?

Ardern explains ‘well-being’ approach to budget, sort of

The Government is promoting it’s next budget (due in May) as a world first ‘well-being’ focussed budget. They may be putting more focus on aspects of well-being, but it’s only the label and the emphasis that is different.

The last National government had a different label – social investment. Their emphasis may have been different but they were trying to address a similar approach to spending decisions.

Jacinda Ardern was asked about her wellbeing approach on Newshub Nation.


The government’s about to deliver the world’s first well-being budget. Okay, so there seems to be concerns from economists that this budget might not be so much based on data. One of the examples that’s come up recently is the Treasury’s cost-benefit analysis, where it puts a figure, a specific value on things like contact with a neighbour or feeling lonely. I mean, how do you put a value on those things that you can’t count?

Incredibly difficult, granted.

Yeah.

Actually, what some of the Treasury have used actually were — some of the modelling, as I understand, was actually developed under the last government, when they were doing social investment. These are all pieces of information that we use in a budget process. But it is not the thing that determines precisely what we then prioritise. It’s an input. It gives us extra information. Because you’re right — some of it— it’s quite hard to build evidence base in some of these areas, and yet we know the economic impact of, actually, some of the social issues we’re trying to address. Now let me give you an example. Internationally, a big discussion around the economic impact of mental health and well-being — we know that there are groups of our society who are experiencing more social disconnection, less contact with the outside world, greater levels of loneliness. Now, that might seem fluffy, but there actually is an economic impact for that downstream. How do we make sure we prioritise investing in the areas that help us from a social perspective, but also, ultimately, economically too.

But some of the, sort of, criteria seem a bit out of whack, as it were. Like, you’ve got minus-$17,000 for loneliness, and that seems to be a greater figure than avoiding a heart attack and all these kinds of things.

And, unfortunately, the Opposition have completely misused the tool that Treasury has created by comparing cost benefit and outputs incorrectly.

Okay.

Treasury have debunked the way that that’s been dealt with, but the primary point I’d like to make is these are just different pieces of data and evidence we can use. Ultimately, though, we are still the ones making the decision over what changes these things at an intergenerational level.

So tell somebody. I mean, it sounds lovely and a bit woolly. So tell someone. It’s a tangible difference about having a well-being budget. What’s a concrete example?

Let me give you an example. So health, for instance. In the past, we’d just tell you how much we’d spent in the health budget. It doesn’t really tell you anything about the well-being or the health of New Zealanders. So then you’ve seen governments over time would instead tell you how many operations we’re purchasing. But, actually, again, that doesn’t necessarily mean we’re investing in a way that saves us money in the long term. What we’re trying to do is factor in, for instance, the fact that children that grow up in poverty are more likely to have health problems as adults just by virtue of that trajectory, and they have the equivalent of what looks like post-traumatic stress. So, actually, if we want to save health dollars here, it makes sense for us to invest in the health and well-being of kids.

Hasn’t that been the motivation of government ministers? Shouldn’t that be the motivation — you know the general well-being of the population from day dot?

It should be, but—

So why do you need the marketing stuff over the top? That should be your primary motivation.

It’s not the way policy is developed or spending decisions are traditionally made. Unfortunately, when you’re a minister — and this has happened through successive governments over decades, and it’s an international problem that was being debated at Davos, for instance —individual ministers, of course, make budget bids in their own area, and so that means that, you know, the Minister of Education might not be thinking about, you know, mental health and well-being issues even though he actually has a role to play in that area. The Minister of Health isn’t necessarily— has the responsibility to deal with what happens with child trauma and child poverty, and yet he picks up the pieces. It’s about trying to get everyone to work together to resolve what are long-term challenges. So, actually, this isn’t about ideology; it’s not about left and right; this is just, I think, a good methodology to use in the future.

“Government is stuck in a fiscal holding pattern”

Bernard Hickey thinks that the Government is “stuck in a fiscal holding pattern” this term due to their commitment to Budget Responsibility Rules, which committed them to get net debt down to 20 percent of GDP and keep the budget in surplus across the economic cycle.

This fiscal straightjacket has been criticised by those who want the Government to launch into significant (and expensive) tax, benefit and social reforms.

Hickey (Newsroom):  ‘Let’s do this’ in a holding pattern

Jacinda Ardern’s first big economic speech of the year warned of global economic headwinds, but it lacked action in response, or a major plan to improve wellbeing. Instead, it exposed how her Government is stuck in a fiscal holding pattern before the 2020 election, when it hopes it can throw off its debt target and capital gains tax shackles.

The breakfast speech to a polite audience of Auckland’s business elite at the Hilton Hotel on the waterfront showed the Prime Minister at the top of her game. She is a smooth operator with a knack for a self-deprecating quip or an aside that can win over even the most sceptical audience.

“Our starting point for the Wellbeing Budget is that while economic growth is important, it alone does not guarantee improvements to New Zealanders’ living standards,” she said, going on to make a strong case to address our obvious wellbeing problems.

“An everyday New Zealander – hearing of the “rock star economy” while their housing costs are skyrocketing, or they can’t afford to send their kids to school with a proper lunch or their mental health is strained – tends to have their faith in the system and in institutions undermined.”

She went on to detail the plans and the priorities for the first Wellbeing Budget in May, and suggested it would help New Zealand cope with economic headwinds from overseas.

“It will ensure that those closest to the margins are protected and that no one is left behind,” she said.

Really?

How can that be true when Kiwibuild is behind schedule and there are massive infrastructure deficits in housing, health, education and transport, which can only be addressed with tens of billions of extra public investment. New Zealand’s population is growing five times faster than the OECD average and Ardern acknowledged in her speech that governments had encouraged population growth without investing in infrastructure to deal with it.

That’s what National had been criticised for (with some justification).

I asked Ardern afterwards if the Government was planning to respond to the slowing economy and higher unemployment by loosening fiscal policy with extra operational or investment spending.

She stuck to the usual line that the Government would keep operating within its Budget Responsibility Rules.

Ardern and right-hand-man and now-Finance Minister Grant Robertson agreed with Green Leader James Shaw shortly after her election as Labour leader to essentially sign up to the same fiscal settings as National had up until earlier that year.

They imposed those rules on themselves to stick with a campaign promise, made to promote Labour as fiscally responsible to combat attempts by National to portray them as loose with money.

Ardern and Robertson are playing a longer game here, but that is frustrating those who want rapid and meaningful reforms.

The only exception to this rule is the need to spend up large to cope with either natural or man-made financial disasters such as the Global Financial Crisis and the Christchurch earthquakes.

The irony is they need a new global financial crisis to give them the excuse to do what they need to do to make a real improvement in wellbeing.

So should the Government use its strong balance sheet to fix New Zealand’s massive infrastructure deficits? Yes should be the answer, but the timing should be now, not in two years time.

Unwilling to break its promise, it is now in a holding pattern and hopes voters keep the faith for long enough to give it a chance to throw off the shackles.

The Government has already committed to some extra spending – they boosted the Families Package, rushed in a tertiary education fees policy, and gave NZ First a $3 billion Provincial Growth Fund kitty. They will also end up with significant increases in teacher and nurse wage bills.

There are pressures to address what Labour had claimed was underfunding in health, but there seems to be no urgency there. They are now seem to be kicking the ‘mental health crisis’ down nine separate working group roads (see Mental health crisis -> 1 working group -> 9 working groups), and have stretched out their promised rebuild of the Dunedin Hospital (now due for completion in ten years).

Ardern has promised big in this year’s ‘wellbeing’ focussed budget, but has also promised small in debt targets, so Grant Robertson will have quite a balancing act to do.

Hickey sees this as a virtual holding pattern for the next two budgets, unless the world economy turns to custard and gives them an out clause.

 

Grant Robertson explains how his ‘wellbeing’ budget will work

Minister of Finance Grant Robertson was interviewed on Q+A  last night on how ‘wellbeing’ will be woven into next year’s budget.

Wellbing in the budget  is described as ‘a new way of delivering public policy and measuring economic success, and now in a world first GDP won’t be the only indicator of our prosperity. Happiness indicators like mental health and poverty will be given weight”.

Is this a new approach? Or is it the ‘social investment’ ambitions of Bill English renamed and repackaged? Possibly a bit of both.

Beehive: Wellbeing of New Zealanders at the heart of Budget priorities

The five Priorities for Budget 2019 are:

  • Creating opportunities for productive businesses, regions, iwi and others to transition to a sustainable and low-emissions economy
  • Supporting a thriving nation in the digital age through innovation, social and economic opportunities
  • Lifting Māori and Pacific incomes, skills and opportunities
  • Reducing child poverty and improving child wellbeing, including addressing family violence
  • Supporting mental wellbeing for all New Zealanders, with a special focus on under 24-year-olds.

“These priorities are focussed on the outcomes that will make real improvements to New Zealanders’ wellbeing,” Grant Robertson said.

“All Ministers and agencies will be collectively responsible for delivering on the priorities. For the first time, they are being tasked with developing their own Budget bids through the lens of the priorities. They are being asked to work together, across portfolios, on initiatives that will deliver the outcomes identified by the priorities.

“New Zealanders will see a difference with next year’s Budget. It will show how we are building an economy that is more productive, more sustainable and more inclusive,” Grant Robertson said.

“Strong economic fundamentals and sustainable economic growth remain integral to New Zealand’s success but they are a means to an end, not an end in themselves. We are widening our Budget focus to look at the wellbeing of our people, the health of our environment and the strength of our communities,” Grant Robertson said.

Q+A:

Robertson:

The caveat to all of this is of course is there are a certain amount of things in a budget that you have to spend on, for example the demand driven expenditure, welfare benefits and funding for children…and that includes some really basic capital needs that we’ve got. And actually we’ve got a lot of left over legacy needs that weren’t invested in.

As any new government does. Labour have kept hammering the ‘lack of investment’ of the last National Government (who kept spending more each year).

Each minister has to put all of their bids for new spending through the lens of wellbeing. There are twelve specific areas (domains) that range all the way from the impact on health to the impact on someone’s life satisfaction…

Who does a budget consider the impact on everyone’s life satisfaction?

These budgets will be based on the evidence of what makes a difference.

Bill English said similar things.

Why is it the Government’s job to address loneliness in the community?

It is never just the Government’s job to do something like that, and I’m absolutely clear about the fact that wellbeing is not something that the Government controls, but by making it part of our purpose therefore we can contribute to supporting an individual or community or a family to reach you know a state of wellbeing that they’re happy with.

We know that if people are disconnected from their communities that can see them becoming unwell, it can see for some people it leads them into mental health issues…

Science or subjective?

There’s no doubt we are putting together here the tangible and the intangible.

What would you do to help someone who is lonely and isolated, what can a Government do to ensure that they’ve got friends?

Well it’s not about ensuring that they’ve got friends, it’s about ensuring they are connected to their communities.

I’m not sure how that will be done via a budget.

ACT Party:

Great question from : “Why is it the Govt’s job to address loneliness?” The Govt’s “wellbeing” approach is about nanny-state politicians and bureaucrats deciding what your best life is, even though every New Zealander is different.

The panel discuss the interview:

Liam Hehir:

It’s all very laudable and unobjectionable in principle.

I do take exception to the idea that it’s the first time the Government has ever been concerned with anything other than GDP, a claim he’s made on several occasions. Governments have always been concerned with the wellbeing of citizens.

I just see this as a mushy PR job.

John Tamihere:

It’s a global movement.

There’s no doubt that the narrative has changed quite dramatically under this government.

The wellbeing, collective impact it’s called, it was championed out of Stanford University 15, 16 years ago, it is running globally and been tested. New South Wales Treasury has been tasked with running a wellbeing budget next year, so there’s a global movement about this wellbeing’s narrative.

It’s a response to supply side economics as the be all and end all, and you’ve got to actually shift your public investments to where you can measure the bang for the buck on whether it’s actually working.

It sounded to me like a great new idea from Labour. Sounds quite similar to where English and National were heading, they just didn’t frame it as “collective impact”.

Jennifer Curtin:

It’s actually about investing in more than economic growth…

You need economic growth to have the money to invest – we have good economic growth at the moment, so a good time to invest.

…and using that as the sole measure of how the country is doing. So it’s about measures. It’s almost a follow on from what Bill English was doing with his social investment strategy.

It’s using the term wellbeing, picks up on what the OECD and what serious economists there are recommending.

I hope it is angled more at ‘collective impact’ than ‘impact on the collective’.

The guidance issued to Ministers and departments:  https://treasury.govt.nz/publications/budget-policy-statement/budget-policy-statement-2019