Jacinda Ardern’s 2019 pre-budget speech

Prime Minister Jacinda Ardern gave a pre-budget speech to Business New Zealand yesterday. Excerpts:


Not surprisingly, I want to talk to you today about next week’s Wellbeing Budget, why we are doing it, what it means and what it will achieve. I’ll also run through some of the pre-Budget announcements we have made to illustrate what the new approach means in action.

As I said when I entered Parliament, I developed a passion for social justice over many years, but in part from living through that and seeing people lose their jobs and seeing families struggle.

For this Coalition Government, a key plank of delivering that change is our Wellbeing Budget. Let me talk a little about our rationale for taking on quite a different approach, and one the OECD is watching quite closely.

…what we are trying to do with the Wellbeing Budget.

It has five priorities, which were developed using the Treasury’s Living Standards Framework, evidence from sector-based experts and the Government’s Science Advisors, and through collaboration among public sector agencies and Ministers.

These priorities, which yes include our economy, but go beyond that too, are the areas where the evidence shows we have the greatest opportunities to make a difference to New Zealanders’ wellbeing.

These 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;
  • 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; and
  • Lifting Māori and Pacific incomes, skills and opportunities.

The second step was to then look at Budget bids under each of these priorities, through a different lens.

We asked three big questions:

  • is the Budget bid intergenerational? Will it make a difference now and for the lives of our children, grandchildren and beyond?
  • does it move us beyond the narrow measures of success to take a wider set of factors into consideration?
  • and, finally, is it a whole of Government approach? After all, for too long policies and initiatives have operated in isolation, sometimes with overlapping work and other times resulting in gaps in policies.

First, homelessness.

Instead of looking solely at public housing places, we have acknowledged that chronic homelessness is often a result of multiple complex and often compounding issues.

Rather than take part in a merry dance on what issue comes first, we should instead, house first.

And that’s exactly what a well-researched and evidenced-based model called Housing First does. It houses those who are in cars or on our streets and then wraps social support around them – whatever is required – to make it stick.

Budget 2019 does that by making the largest Government investment in chronic homelessness ever, and rolling out Housing First into more centres, and funding more places.

Family and sexual violence

Every year about one million New Zealanders are affected by family and sexual violence, including almost 300,000 children.

Violence is expensive, in more than one way. It, for instance, can do as much harm to a child who witnesses it, as it does to a child who is directly harmed. And that then plays out in their behaviour, and their relationships. And so it continues.

We all know we need to put in place a crisis response, but we just haven’t invested much before in breaking cycles, working with children for instance, or addressing the mental health impact of family and sexual violence. A wellbeing approach demands that we do.

And so on Sunday we announced a $320 million investment in this area. And because of our new coordinated approach, it’s an investment that will sit across eight portfolios and deliver more support services to more New Zealanders, major campaigns aimed at stopping violence occurring and major changes to court processes to reduce the trauma victims’ experience.

Budget Responsibility Rules

Finance Minister Grant Robertson…confirmed we will meet all of the Budget Responsibility Rules as we did last year as well. For anyone who needs or wants a reminder, these were a set of self-imposed rules to demonstrate our commitment to sound economic management covering our debt-to-GDP ratio, core Crown spending and Budget surpluses.

The reaction to his news that following the expiry of the Budget Responsibility Rules in 2022 we would be moving from a net debt target (of 20%) to a net debt range (of 15-25%) received positive and negative attention – usually a sign we have the balance right.

Global Economy

Fortunately we are well positioned to face instability and uncertainty. Although growth rates are set to be lower than we have seen in recent years, the IMF projections for New Zealand are that we will still grow at around 2.5% in 2019 and 2.9% in 2020. We are still tracking ahead of most of our major trading partners. The average growth for advanced economies in the same period is projected to be 1.8% and 1.7% respectively.

We are projected to grow faster than the US, the UK, Japan, Canada, the Eurozone and Australia. Just this week the OECD released its latest outlook which also shows us growing faster than our peers, while last week the Reserve Bank of Australia further lowered its 2019 growth forecast for the Australian economy.

We continue to have historically low unemployment and stable, low inflation. This is supported by Budget surpluses and low public debt due to our Government’s responsible fiscal management.

This all supports this Government’s economic plan which includes:

  • Focussing on increasing trade and broadening our trading base to protect our exporters and economy through the introduction of the CPTPP, pursuing an EU FTA and we recently, of course, signed our Enhanced Partnership with Singapore.
  • We are reforming skills and trade training to address long-term labour shortages and productivity gaps in the New Zealand economy, to make sure we are prepared for ongoing automation and the future of work – I’d like to acknowledge the work Kirk and Richard Wagstaff are doing alongside the Finance Minister on the Future of Work Tripartite Forum. So far a focus on the future of work has meant greater investment in apprenticeships and partnership with business like the skills pledge launch by my Business Advisory Council under the leadership of Christopher Luxon.
  • We are addressing our long-term infrastructure challenges – and that doesn’t just mean billions in investment, but establishing long-term planning through the Infrastructure Commission.
  • We are transitioning to a sustainable carbon-neutral economy. Our focus is not only having a long-term plan through the Zero Carbon Act, but also investing in R&D as the economic transition occurs.
  • And, of course, investing in wellbeing because this is inextricably linked to our economic success too. You will see more on that in the Budget on May 30.

These economic initiatives are, in turn, part of the Government’s approach of finding pragmatic solutions to New Zealand’s long-term challenges.

CONCLUSION

Ultimately though, it’s fair to say we are taking nothing for granted. Our relatively solid position does not mean we should simply ride out the conditions around us. Nor do the existing parameters successive governments inherit mean we should use traditional frameworks to make decisions or measure success.

Systemic change does however take time.

My hope is though that this year, by meeting both the Budget Responsibility Rules and with the new Wellbeing Budget, you’ll see us doing exactly what is needed – setting a strong foundation for both our country and our people.

Full speech at Scoop.

Little claims on Kiwi incomes

Andrew Little has made some questionable claims and implications in his pre-budget speech.

Stuff reports: Labour leader Andrew Little: Kiwi families’ pay packets $50 a week worse off under National

A squeeze on “middle New Zealand” means the average Kiwi family has missed out on more than $13,000 in wages since the National government came to power, Labour leader Andrew Little says.

Little said Labour research showed just 37 per cent of economic growth had gone into the pay packets of working families since National came to power in 2008 – down from over 50 per cent under the previous Labour government. 

That meant the average family had lost out on more than $13,000 under the Government, and would miss out on an average of $50 a week this year.

I hope that gets checked out independently. It sounds like an odd way and questionable way to compare wage rates over a period of time.

“That is why things are getting so out of kilter, and why wages and salaries have got no chance of keeping up with house price inflation and a whole lot of other areas.”

Economic Development Minister Steven Joyce could have a point describing the speech as “just another bunch of slogans”.

Little has attacked the Government’s economic priorities ahead of its eighth Budget on Thursday, saying its focus on “looking after the few at the very top” means other Kiwis are suffering.

Sounds like dishonest nonsense, trying to establish and build a meme that doesn’t stack up with reality.

Little said the Government’s inaction on foreign trusts was a sign of its priorities.

What?

“While the few at the very top get to enjoy special rules that meant they didn’t have to pay their fair share – everyone else is paying the cost.” 

Little seems to have decided that a winning strategy is to establish the ‘perception’ that John Key and National only care about and only do things for the top 1%.

If Little keeps going like this he might end up only representing 1%.

Ok, all I’ve seen is the one report, from stuff. I’m sure someone at The Standard and Rob Salmond think that (or claim that) Little is right on the money.

But I’m becoming bitterly disappointed in Little trying lame attack after dishonest diss rather than promoting his own and his party’s strengths and policies.

I would link to Little’s speech but I can’t load labour.org.nz – maybe it is overloaded due to popularity.

So here’s The Standard on it:

Andrew Little’s pre-budget speech

Labour leader Andrew Little gave his pre-budget speech yesterday to an audience at Mac’s Brewery in Wellington.

It is also being promoted to a wider audience it has been posted via Labour’s website. The intro:

Thanks for reading my pre-budget speech. In it I talk about how National has broken so many of its economic promises, how it has failed to prepare us for the future and why so many New Zealanders feel they are missing out right now.

Due to an awful layout it’s hard to read through, there are too many changes of format and font. And as this intro suggests it concentrates on slamming National.

The most reported line was :

A lot of effort has gone into glossing over the broken promise. But I see it for what it is — one of the biggest political deceptions in a lifetime.

That may have attracted attention but  it was More than a Little over the top – especially considering that in Little’s lifetime the Lange/Douglas Labour government is famous for a far bigger flip in the 1980’s than failing to quite reach a preferred economic target.

Little’s intro also says:

We need to create more wealth and share it — that means putting jobs front and centre, investing in a more diverse productive economy and boosting our regions.

He gets to what he thinks National should have done about two thirds of the way through his speech.

What they should have done

So, what would a responsible government have done between 2008 and today?

I say there were four major missed opportunities.

  • First, a responsible government would have laid the foundations to diversify the economy.
  • We should have used the economic growth of the last four years to increase our investment in innovation. The government ignored that approach.
  • The third missed opportunity is that a responsible government should have revitalised New Zealand’s regions. Instead, this government ignored them.
  • Finally, this government should have reformed tertiary education to prepare for the coming tidal wave of change in the future of work.

Then he gets to what his vision is. I won’t put this in quotes to retain the formatting.

New Zealand’s next government

I began today by telling you that it is rare for a budget to profoundly affect people’s lives. But that’s the sort of Budget we need now. This could have been one of those budgets. With good growth and low inflation, this is the moment for visionary thinking.

So what is my vision?

I want a New Zealand where neither your postcode nor your parents determine the success you can achieve in life, only your effort does.

I want a New Zealand seizing the opportunities of new ways to do business this century, not struggling to catch up as the world moves on.

A country that trains its young people for the jobs they’ll actually do, not the jobs their parents did.

A country where we reward the risk takers, the innovators, the unafraid.

Where we celebrate growing wealth, and where everyone who works for that success shares in the rewards.

A country where owning your own home is still an achievable dream.

None of this will be easy. The deep, structural problems we face in New Zealand don’t have any quick fixes. Anyone who tells you otherwise is a fraud.

Tackling New Zealand’s problems takes commitment, perseverance, vision, and the willingness to take risks. Doing the right thing for New Zealand requires focus, not focus groups.

That’s why our Future of Work Commission, led by our finance spokesperson Grant Robertson, is a two-year commitment where we listen more than we talk, and we come to pragmatic solutions that will guide our policy in the decades ahead.

The Commission is a model of the way we’ll approach all the big issues. We’ll listen, we’ll deliberate, and when we act we’ll make a real difference. That’s the only kind of government I want to lead.


The challenge ahead

We’ll be holding this Government to account on New Zealand’s big issues next week and beyond, in the House and around the country.

That’s our job, that’s what we do.

But there’s a role for you, too.

After the budget each year, Ministers hit the road.

John Key, Bill English and Steven Joyce will be speaking to businesses many times in the coming weeks.

That’s the opportunity for everyone to raise the issues the Government hasn’t delivered on.

Hold them to their word. Ask them:

· Why haven’t we hit surplus?

· Why are we still so reliant on so few commodities?

· Why are you still ignoring the housing crisis?

· Why are you still neglecting the regions?

· And, most importantly, where’s the plan to diversify our economy?

Put these questions to the Government, and see if they have any answers.

Next Thursday, this government has an opportunity to start answering these questions. They have a chance to chart a new course for the New Zealand economy.

It is imperative that they take it.

It’s not unreasonable for every New Zealander to want the best for New Zealand.

· We deserve a government in surplus

· We deserve a solution to the housing crisis

· We deserve vibrant regions

· And most importantly, we deserve a plan to diversify the economy, bringing good jobs to all.

That’s what a responsible government would deliver.

Thank you.

We deserve less exaggeration and nonsense claims about what National have done and haven’t done.

We deserve some detail on what Little and Labour would actually do different

That’s why our Future of Work Commission, led by our finance spokesperson Grant Robertson, is a two-year commitment where we listen more than we talk, and we come to pragmatic solutions that will guide our policy in the decades ahead.

Opposition parties should listen and learn. But they also need to give some indication of what they would do.

Labour have had the last six and a half years to listen and to come up with pragmatic solutions. It sounds like we’re going have to wait another two years to find out what their policies will be.

The Commission is a model of the way we’ll approach all the big issues. We’ll listen, we’ll deliberate, and when we act we’ll make a real difference. That’s the only kind of government I want to lead.

It doesn’t sound much like leading. As much as people like to think they are being listened to they ultimately look for leadership.

All Governments try to ‘make a real difference’. There’s too much vague speech writer babble.

And too many clashes with reality. For example how much have Labour consulted and come up with a pragmatic solution to low voter turnout? Labour proposes withholding tax credits unless enrolled to vote may be a policy in progress but it’s been reported that not even the Labour caucus was consulted about that.

And in being so vague and promising to listen there’s risks. Little’s speech was to a business audience. If the business community say they and the country would benefit from lower business tax rates what sort of ‘pragmatic solution’ would Labour come up with? Pragmatic for whom? New Zealand businesses? Or party appeasement?

This speech seems too long, too negative, too vague, and clashes too much with reality.

Too much blah blah blandrew.

What happened to the blunt, direct, believable Andrew Little of the first few months of his leadership?

He seems to have been transformed into just another package of palaver dominated by pissy pouting.

As one person remarked, this looks like a speech by committee. Labour has lacked effective leadership since 2008. After a brief glimmer of hope it looks like the party under Little is back in it’s rut.

Cunliffe’s pre-budget announcement

Labour’s pre-Budget announcement as tweeted by various journalsts:

  • If elected, unemployment would drop to 4 percent after 3 years.
  • Says to meet this target they need to create 20k new jobs.
  • Cunliffe says Labour govt will stay in surplus – unless there is I’national downturn or domestic disaster.
  • Cunliffe says on projections National will take unemployment to 5 per cent.
  • David Parker says he’s absolutely confident policies are “job rich”
  • Cunliffe says the focus won’t be on creating govt jobs, but on innovation.
  • Denies Labour riding on the improving economy under National and being opportunistic by announcing unemployment target.
  • Cunliffe confirms there is going to be increase in top tax rate – but not saying (yet) what it will be.
  • Also not revealing surplus targets today- but will resume contributions to Cullen fund when books back in black.

Labour announcement:  Jobs and Surplus Targets:

Announcement from David Cunliffe, Labour Leader

This week, the Government will try to tell the country that a Budget surplus means their economic management has been a success.

They will ask us to ignore the stagnant wages of most working families.

They will ask us to turn a blind eye to the soaring costs of living: at the supermarket, in our power bills and in our mortgages and rents.

And they will ask us to act as if the growing gap between rich and poor in this country is not a measure of our economic success or failure.

But we in Labour know that the Budget is about more than numbers; it’s about New Zealanders. We believe that politics should serve people, not the other way around.

Behind every statistic, on every line of every balance sheet there are real impacts on real human lives. That is where we determine the success or failure of any economic policy. Because for Labour, people are at the heart of everything we do.

Let me be clear. Getting the books in order is important. Labour has nothing to prove here – we ran consistent surpluses when last in Government.

Our policies will be fully costed and we will bring down National’s debt.

But we also know that New Zealanders want more from their government than tidy book-keeping.

New Zealanders expect a government that puts people first. A government that provides positive solutions to our work, our families and our homes.

Increasingly, National’s politicians are too concerned with paying favours to their wealthy donors to focus on the needs of New Zealanders.

They’re too busy worrying about Cabinet Clubs and crony capitalism to deal with the problems that our families are facing.

Like the fact there are 147,000 unemployed New Zealanders today. That is too many families denied an income and the dignity of work.

Like the fact there are now 285,000 children living in poverty in this country – up 45,000 since National came into power. That’s a national tragedy that will echo through generations.

Or the fact the homeownership rate among young people in their 30s has plummeted to just 43%. That’s a denial of the basic Kiwi dream of a place to call your own. It condemns families to a lifetime of renting and insecurity.

National hasn’t dealt with these problems. Labour will.

Today, I’m going to focus on jobs because work is a core Labour value and fundamental to lifting living standards.

Over the past two months, we have released a series of Economic Upgrade policies that will create better jobs with higher wages.

Our monetary policy upgrade will lead to lower interest rates and ease the overvalued currency. That will make our exporters more competitive overseas and boost businesses at home.

Our forestry and manufacturing upgrades are a model for how Labour plans to reward innovation and investment in these job-rich export industries.

KiwiBuild – our plan to build 100,000 affordable homes in 10 years – will turbocharge the construction sector while NZ Power will reduce costs to businesses and increase households’ spending power.

A Capital Gains Tax will boost growth by shifting investment into the productive sector. Instead of rewarding property speculation, a Labour Government will reward businesses that innovate, invest and employ.

These policies, and further policies that will be announced closer to the election, will create many thousands of jobs and get Kiwis back into work.

Today, I am announcing that the government I lead will have a goal of reducing unemployment to 4% by the end of our first term.

That amounts to a commitment to get 20,000 more Kiwis into work than is projected under National.

Now, National will criticise this ambitious target. Back in 1999, when unemployment was 6%, as it is today, then Treasurer Bill English also scoffed at our goal of reducing unemployment. He called it a hoax.

Well, we got unemployment as low as 3.5% and achieved average unemployment of 3.9% for 5 years.

We did it then, and we’ll do it again, because Labour is the party of jobs. This programme to drive economic growth and improve the lives of New Zealanders will be built on solid fiscal foundations. This is in keeping with our record of running consistent surpluses and paying down debt.

We need to post surpluses so that we can pay down the record debt accumulated by the current government.

So, today, I am also announcing that it is my intention that we’ll stay in surplus unless there’s another international downturn or domestic disaster that necessitates a counter-cyclical policy.

The Government has to start to live within its means to pay back the record $40 billion that John Key has slapped on the nation’s credit card. That will mean we can’t afford all the policies we would like straight away. We will need to get the books in order first.

With solid fiscal foundations and policies to support business growth, Labour will deliver more jobs, higher wages and better lives for all New Zealanders.

 

The detail

Labour will:

  • Bring unemployment back down to pre-National levels and set a target of 4% unemployment by the end of our first term,
  • Run surpluses every year, unless there is a significant downturn, so that we can reduce the record debt that National has built up.

 

Bring unemployment back down to pre-National levels by the end of our first term and then keep driving it lower

Labour believes that people matter most. Work is at the heart of Labour’s values. Labour believes in full employment; that every New Zealander who wants a job should be able to find one.

The previous Labour Government brought unemployment down and kept it low at 3.5%-4.5% for five years from 2004 to 2008. The number of people who had been unemployed for over a year fell to as low as 2,400.

Five years on from the end of the recession and in the middle of a rebuilding boom in Christchurch, unemployment is still more than 50% above pre-recession levels. The number of people unemployed for over a year now stands at 18,000.

It is understandable that unemployment increased during the recession but not that it is still so high five years later. Just 11 of 34 OECD countries have had a larger percentage increase in the unemployment rate than New Zealand between 2008 and 2014. In 7 OECD countries, the unemployment rate is now lower than 2008 levels.

The cost to families and communities of unemployment is huge. It is also a significant burden on the Crown. The extra unemployment under National has cost over $2 billion in additional benefit expenses and untold billions in lost tax revenue.

The most recently released Treasury projections show that National will never get unemployment back down to pre-recession levels.

Labour will undo the damage done by National. We will set a target of reducing unemployment to 4% by the end of our first term.

This will involve creating around 20,000 more jobs than are projected under National.

Labour’s policies of Economic Upgrades, monetary policy, Kiwibuild and NZ Power will all grow the economy and create thousands of jobs. In the lead up to the election, we will be announcing further policies that will get more Kiwis into work.

Graph 1

 

Graph 2

 

Run surpluses every year, unless there is a significant downturn, so that we can reduce the record debt that National has built up

Labour’s policies for economic growth and improving the lives of New Zealanders will be built on solid fiscal foundations. This is in keeping with our record of running consistent surpluses and paying down debt.

The current National Government has never run a surplus. While deficits were an appropriate response to the economic crisis and the Christchurch earthquakes, much of the borrowing they have undertaken has been unnecessary.

Tax cuts for high-income people, bailouts for corporations, and the blow-out in the cost of the asset sales are examples of poor decisions by National that led to billions of dollars of borrowing.

Labour is committed to running surpluses in government. This is necessary so that we can pay off the record debt built up by the National Government.

We will run surpluses on average across the economic cycle. That means we’ll stay in surplus unless there’s another international downturn or domestic disaster that necessitates a counter-cyclical policy.

Labour’s series of economic upgrade policies will help the economy grow faster. That will create jobs resulting in lower benefit costs and higher tax revenue for the Crown.

Our plans for faster growth will help us pay off National’s debt faster.

 

Labour’s jobs policies

Click for more detail:

  1. Manufacturing Upgrade — create jobs by ensuring the government buys more Kiwi-made products and supports high-tech manufacturing,
  2. Forestry Upgrade — create jobs with policies to expand the high-value wood products sector,
  3. KiwiBuild — create jobs in the construction sector,
  4. Monetary Policy Upgrade — create jobs by easing interest rates and the exchange rate, making our exporters more competitive and increasing household disposable incomem
  5. Capital Gains Tax — create jobs by shifting investment into the productive sector,
  6. NZ Power — create jobs by reducing electricity costs to businesses and increasing household disposable income,
  7. Futher policies to be announced.

 

Printable versions

Click to download:

  1. Announcement by David Cunliffe, Labour Leader (.PDF, 1.6MB),
  2. Factsheet (.PDF, 0.4MB)