New Zealand’s finance minister is a week away from the most important date in his professional calendar: the presentation of the next budget. And it could be in for a tough sell.
The image Grant Robertson carefully cultivates is that of a disciplined spender and fiscal policy nerd, joking that it’s “great to have a bit of public finance in the morning” and saying that infrastructure deficits keep it awake at night.
It’s an image he needs to nurture to weather a volatile new year and retain the votes Labor has clawed back from traditional right-wing voters in 2020. The budget – due to be tabled on Thursday – will be a key moment to set the scene as the country heads towards a 2023 election.
“This one is about security,” Robertson says of Budget 2022. “It’s about giving New Zealanders a secure future that’s built on this kind of low-emission, high-wage economy.”
“Balance”, “reset” and “security” are words Robertson has used frequently in his budget announcements in recent weeks as he seeks to reassure the public that the economy is in good hands.
Less “crisis budget”
In the first pre-budget speech last week, Robertson gave a preview of what the 2022 budget will entail: big spending on health and the environment, new commitments on borrowing limits and debt targets and a goal to look at long-term spending in the short term. forward cash injections.
It’s the fourth budget he’s crafted using the ‘wellness approach’, which includes a broader range of outcomes, including health, to assess the success of policies and has grabbed headlines. international newspapers in 2019.
Robertson admits Covid has disrupted wellbeing budgets for the past two years and they weren’t ‘quite how [he] was considering them,” but now that this budget is “less of a crisis budget,” the government is returning to its original welfare framework, he says.
It is also the third budget to be eclipsed by Covid. But unlike the past two years, when the government has been buoyed by its success in handling the pandemic and its extraordinary popularity, this year the shine is fading and its spending will come under closer scrutiny accordingly.
Opposition Leader Christopher Luxon has regularly accused the government of being “addicted to spending” and alleged that it is driving up inflation. “We don’t need cuts in public spending and services, but we need to make sure that any unnecessary spending or new additional spending will pay off,” he told RNZ last month.
With food prices at an all-time high, inflation at its highest level in three decades, fuel prices topping $3 a liter and sky-high housing costs, Labor has paid the price in the polls. Robertson is “not surprised” at the change in numbers.
“After going through Covid and sacrificing a lot, we now have this global inflationary shock. People are tired…and they’re a bit grumpy.
While Jacindamania could perhaps best be described as Jacinda-meh-nia, Robertson says Jacinda Ardern is still the best person for the job. “Jacinda is still highly respected in New Zealand. She’s a great leader and someone who I think has the vision and the wherewithal to lead us.
If there was ever a time to steady the ship, it’s now. For Robertson, that means investing significantly in the worn-out health care system and pumping money into climate change solutions — important concerns he says he “owes to the people.”
“If we don’t address the issues of climate change, our children and grandchildren won’t forgive us, and they would be right not to,” he says.
But this year’s budget may not bring the immediate relief that many New Zealanders are looking for struggling with day-to-day expenses.
Robertson is quick to unveil some of the responses the government has already made to the cost of living crisis, including increased winter energy payments, an excise on fuel taxes, halving of fares public transport and service increases. The crisis “clearly puts significant pressure on households,” he says.
“I believe my job as finance minister is to manage the here and now, but also to look to the future because it’s very difficult for households to do that,” he says.
“We’re not going to lower fuel prices by cutting healthcare spending.”
Faced with a “global phenomenon”
The government is ‘between a rock and a hard place for the first time in two years’, with both the Covid response collapsing and the cost of living crisis soaring, says commentator Ben Thomas politician and former national government staffer.
“It’s a bit of a global phenomenon and equally tricky for all governments everywhere.
“They [just brought] cut gasoline prices by 25 cents, and that cut has been completely eaten away since it was announced six weeks ago.
The government is back in the same position it was in, but with more pressure to meet public expectations for a response, Thomas says.
“You could probably get anyone to accept [the big ticket items] are important, but they do little in the short term to correct rising inflation and the rising cost of living.
Yet finance ministers tend to under-promise and over-deliver on budget day, he says.
“Robertson – it must never be forgotten – was the architect of Helen Clark’s interest-free student loan policy, which was concocted on very short notice and practically won them the 2005 election.”
Despite some of the discontent indicated in the polls, he remains optimistic, saying: “We have some of the best economic indicators, whether it’s around debt or GDP or how quickly we’re returning to surplus or unemployment. … These are tough, tough times – I’m not claiming they aren’t – but we’re in a better position than most to pull through.